Labour Cost Percentage Calculator (Australia)
Calculate what percentage of your revenue is spent on labour. This tool compares payroll costs against revenue to help you assess staffing efficiency and profitability.
Takes ~15 seconds · No login required · AU estimates only
Enter your figures
Your results
Enter revenue and payroll cost to see your labour cost percentage
Labour cost percentage
0.0%
Payroll cost
$0.00
Revenue
$0.00
Quick reference
Formula
Labour cost % = (Payroll ÷ Revenue) × 100
Lower is generally better
But too low may indicate understaffing
Include all labour costs
Wages, super, and on-costs for accuracy
This calculator provides general estimates only. Labour cost benchmarks and targets vary by industry and business model.
What is labour cost percentage?
Labour cost percentage shows how much of your revenue is spent on staffing. It's one of the most important indicators of profitability for Australian businesses, particularly in service industries.
The calculation is straightforward: divide your total payroll cost by your revenue for the same period, then multiply by 100. This gives you a percentage that you can track over time and compare against industry benchmarks.
Labour Cost % = (Payroll ÷ Revenue) × 100
Example: $30,000 payroll ÷ $100,000 revenue = 30%
What is a "good" labour cost percentage?
There's no universal answer—the right percentage depends heavily on your industry, business model, and operating costs. However, some general patterns emerge:
Hospitality
25-35%
Tight margins and high competition require careful cost control
Retail
15-25%
Varies based on product margins and customer service level
Professional Services
40-60%
Labour is the primary value proposition in service businesses
Healthcare
50-70%
Higher mandated staffing requirements drive labour costs
Rather than chasing a specific number, focus on understanding what's normal for your industry and tracking your own trends over time. A sudden increase may signal overstaffing or declining revenue, while a sharp decrease could indicate understaffing risks.
How to reduce labour cost percentage
If your labour cost percentage is higher than you'd like, there are several strategies to consider:
Optimise your rosters
Match staffing levels to actual demand. Avoid over-rostering during quiet periods and ensure the right mix of skill levels.
Reduce unnecessary overtime
Overtime attracts significant penalty rates. Better planning and cross-training can help reduce reliance on overtime hours.
Match staffing to demand
Use historical data to predict busy and quiet periods. Schedule experienced staff when they're most needed.
Track actual vs forecast hours
Compare rostered hours against actual hours worked. Identify where hours are being added and address the root causes.
Want to keep labour costs under control?
Upgrade to RosterElf for real-time labour cost tracking, roster costing, and automatic budget alerts.
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Frequently asked questions
- Yes, if you include it in your payroll cost. Enter the gross wages plus super for the most accurate result.
- Many businesses do. You can toggle these on in the advanced settings for a more complete estimate of your total labour cost.
- No. Targets vary widely depending on margins and operating model. Hospitality often runs higher percentages due to lower margins, while retail varies significantly by product type.
- Yes. The formula is the same for any period. Just ensure your revenue and payroll cost are for the same time period.
- No. It's a planning and benchmarking tool only. For compliance purposes, consult your accountant or use official ATO resources.
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Disclaimer
This calculator provides general estimates only. Labour cost benchmarks and targets vary by industry and business model. This is not financial or payroll advice.
Labour cost percentage calculator – disclaimer & terms of use
Please read and accept the following terms before using this calculator.
1. Estimates Only
This calculator provides general estimates for planning and educational purposes only. Results are not intended to be accurate, complete, or suitable for any specific purpose.
2. Not Financial or Accounting Advice
This tool does not provide financial, accounting, or business advice. Labour cost percentages vary by industry, location, and business model. Always consult with qualified professionals.
3. User Responsibility
You are solely responsible for:
- verifying all calculations with your accountant or financial advisor,
- ensuring accurate input of revenue and labour cost figures,
- understanding how this metric applies to your specific business.
4. Industry Benchmarks Vary
Target labour cost percentages differ significantly by industry. The benchmarks provided are general guidelines only and may not apply to your specific situation.
5. No Guarantee of Accuracy
While we aim to provide helpful estimates, we make no warranties about the accuracy, reliability, or completeness of the results.
6. Limitation of Liability
To the fullest extent permitted by law, RosterElf and its providers disclaim all liability for any loss, damage, or claims arising from the use of this calculator or reliance on its results.
Confirmation
I understand that this calculator provides estimates only and is not a substitute for professional advice. I will verify all calculations before making business decisions.
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