How to Calculate Labor Costs for Cleaning Bids — The Complete Formula

Most cleaning companies lose money on bids for one simple reason: they base their pricing on the hourly wage they pay their cleaners, not the actual cost of that labor.

If you're paying someone $16/hour and using $16 in your bid calculations, you're already in the red. The real cost — after payroll taxes, insurance, and benefits — is closer to $19-$22/hour depending on your state.

This gap between wage and actual cost is called the labor burden, and it's the single most important number in your bid.

What Is Burdened Labor Cost?

The burdened labor cost (or "fully loaded" labor cost) is the total cost to employ one hour of cleaning labor. It includes:

Base wage — what you pay the cleaner
FICA — your share of Social Security and Medicare taxes
FUTA — federal unemployment tax
SUTA — state unemployment tax (varies dramatically by state)
Workers' compensation — insurance for on-the-job injuries
Benefits — if you provide health insurance, PTO, etc.

When you bid a cleaning contract, the burdened rate is what you use to calculate your labor cost — not the raw wage.

The Burden Rate Formula

Here's the complete formula:

Burdened Hourly Rate = Base Wage × (1 + Burden Multiplier)

Where:

Burden Multiplier = FICA% + FUTA% + SUTA% + Workers Comp% + Benefits%

Let's break down each component.

FICA — 7.65%

Every employer in the US pays:

Social Security: 6.2% on wages up to $168,600 (2024 cap)
Medicare: 1.45% on all wages (no cap)

Total: 7.65% of every dollar of wages. This is not optional — it's federal law.

FUTA — 0.6%

Federal Unemployment Tax Act. The gross rate is 6.0% on the first $7,000 of each employee's annual wages. But if you pay your state unemployment tax on time (you do), you get a 5.4% credit, making the effective rate 0.6%.

For annual calculations, FUTA is capped. Once an employee earns $7,000 in a year, you stop paying FUTA for them. But for bidding purposes, using 0.6% across all hours is a safe approximation — especially for part-time cleaners who may not hit the cap.

SUTA — Varies by State (0.1% to 12%+)

State Unemployment Tax varies enormously:

| State | New Employer Rate | Range | |-------|------------------|-------| | Texas | 2.7% | 0.25% - 6.25% | | California | 3.4% | 1.5% - 6.2% | | Florida | 2.7% | 0.1% - 5.4% | | New York | 4.1% | 2.1% - 9.9% | | Illinois | 3.175% | 0.525% - 6.925% | | Ohio | 2.7% | 0.3% - 9.8% | | Pennsylvania | 3.822% | 1.419% - 10.8937% |

Your actual rate depends on your company's experience rating — how many former employees have claimed unemployment. New companies typically pay the "new employer" rate for 2-3 years, then get adjusted based on their claims history.

Pro tip: Check your state's unemployment tax portal for your actual rate. Using the new employer rate is a safe starting estimate.

Workers' Compensation — 3% to 5%+

Workers' comp rates for janitorial work (NCCI class code 9014) vary by state:

| State | Base Rate (per $100 payroll) | As Percentage | |-------|----------------------------|---------------| | Texas | $3.12 | 3.12% | | California | $4.85 | 4.85% | | Florida | $3.45 | 3.45% | | New York | $4.20 | 4.20% | | Illinois | $4.50 | 4.50% | | Ohio | $3.80 | 3.80% |

Your actual rate is also adjusted by your EMR (Experience Modification Rate):

Actual WC Rate = Base Rate × EMR

EMR of 1.00 = average claims history
EMR below 1.00 = better than average (lower cost)
EMR above 1.00 = worse than average (higher cost)

New companies start at 1.00. A clean safety record lowers your EMR over time.

Benefits — 0% to 15%+

This depends entirely on what you offer:

| Benefit | Typical Cost | |---------|-------------| | No benefits | 0% | | Basic PTO (5 days) | ~2% | | Health insurance | 5-10% | | Full package (health + dental + PTO + 401k) | 12-20% |

Many small BSCs don't offer benefits to hourly cleaners. If that's you, use 0%. But if you do offer benefits, you must include them in your burden calculation or you'll underbid consistently.

Worked Example: Texas, $16/hour

Let's calculate the burdened rate for a cleaner in Texas earning $16/hour:

| Component | Rate | Amount | |-----------|------|--------| | Base wage | — | $16.00 | | FICA | 7.65% | $1.22 | | FUTA | 0.6% | $0.10 | | SUTA (TX new employer) | 2.7% | $0.43 | | Workers' comp (TX) | 3.12% × 1.00 EMR | $0.50 | | Benefits | 0% | $0.00 | | Total burden | 14.07% | $2.25 | | Burdened rate | | $18.25/hr |

Your $16/hour cleaner actually costs you $18.25/hour. That's a 14% increase over the raw wage.

Worked Example: California, $18/hour

California has higher minimum wages and higher tax rates:

| Component | Rate | Amount | |-----------|------|--------| | Base wage | — | $18.00 | | FICA | 7.65% | $1.38 | | FUTA | 0.6% | $0.11 | | SUTA (CA new employer) | 3.4% | $0.61 | | Workers' comp (CA) | 4.85% × 1.00 EMR | $0.87 | | Benefits | 0% | $0.00 | | Total burden | 16.50% | $2.97 | | Burdened rate | | $20.97/hr |

In California, the burden adds nearly $3/hour to every cleaner's cost.

Worked Example: New York, $17/hour with benefits

A New York BSC offering basic PTO and health insurance:

| Component | Rate | Amount | |-----------|------|--------| | Base wage | — | $17.00 | | FICA | 7.65% | $1.30 | | FUTA | 0.6% | $0.10 | | SUTA (NY new employer) | 4.1% | $0.70 | | Workers' comp (NY) | 4.20% × 1.00 EMR | $0.71 | | Benefits (health + PTO) | 8% | $1.36 | | Total burden | 24.55% | $4.17 | | Burdened rate | | $21.17/hr |

With benefits in New York, the burden is almost 25% — a $17 wage becomes a $21.17 cost.

From Burdened Rate to Bid Price

Once you have your burdened rate, the bid calculation is straightforward:

Monthly labor cost = Burdened rate × Hours per visit × Visits per month

Then add supply costs and your target margin:

Monthly bid price = (Labor cost + Supply cost) / (1 - Target margin%)

Quick example

Burdened rate: $18.25/hr
Hours per visit: 6 hours (calculated from ISSA rates)
Visits per month: 22 (5 nights/week)
Monthly labor cost: $18.25 × 6 × 22 = $2,409
Supply cost at 5%: $120.45
Total cost: $2,529.45
At 25% margin: $2,529.45 / 0.75 = $3,372.60/month

If you'd used the raw $16 wage instead of the $18.25 burdened rate, your labor cost calculation would have been $2,112 — that's $297/month in hidden costs that eat directly into your margin.

The Most Common Mistake

Most cleaning companies know about FICA. Many know about workers' comp. But SUTA is the one that catches people off guard because it varies so much by state and by your company's experience rating.

A company in Florida might pay 0.1% SUTA (nearly nothing). A company in Pennsylvania with poor claims history might pay 10%+. That's the difference between a 12% burden and a 25% burden on the exact same wage.

If you're bidding across multiple states, you need to calculate burden separately for each state. Using a single national average will overcharge some clients and undercharge others.

Stop Calculating By Hand

The burden rate formula isn't complicated, but it's easy to get wrong — especially when you're juggling different state rates, varying EMR, and changing wage levels across your crew.

BidLoom calculates the full burdened labor cost automatically based on your state, wage, and benefits. Every bid uses the correct burden rate, so you never underbid on labor costs again.

Create up to 3 bids free — no credit card required.