The model
Labour cost
Hours of effort multiplied by the effective hourly rate — how every effort figure in the model becomes money.
- Unit
- money
- Where you enter it
- Applied throughout; the rate comes from Settings.
What it means
The conversion applied to every effort line: hours multiplied by the effective hourly rate. It is what "cost" means throughout the calculator, with token cost added where a tool consumes AI model tokens.
The model counts labour, licensing, infrastructure and tokens; it deliberately does not price quality outcomes such as defects that reach production or the value of releasing faster.
Why it matters to the cost
Keeping the conversion this plain is what makes the model checkable by hand, which is what makes it defensible in a procurement meeting. Anyone can multiply hours by a rate; nobody can audit a black box.
Typical values
Not a value you enter; a rule applied everywhere.
Typical values describe a category of tool — AI-native, codeless, script-based, homegrown, manual — never a named product. Why we do not price named products.
Where it appears in the model
Turning effort into cost
- Effective hourly rate
- loaded cost per FTE per year ÷ productive hours per FTE per year
- Labour cost
- hours × Effective hourly rate
- Token cost
- tokens ÷ 1,000,000 × cost per million tokens
Every name is a link to its definition. See the whole model.
Try it with your numbers
The calculator works labour cost out from the rows it is built on. Change those and every total on the page moves with them — free, in your browser, nothing to install.
See how labour cost impacts the calculation of test automation costsLast reviewed 2026-09-15. All terms.