Two figures decide whether an estimate is sound.
Labour burden
The full hourly cost of employing someone: wage plus employer taxes, insurance, workers compensation and benefits — see labour cost.
Commonly fifteen to thirty per cent above the wage before anything else, and higher again once unbilled hours are spread across billable ones.
Estimating on the wage understates cost by that whole margin, on every job.
Production rates
How long a defined task actually takes, on average, including setup and clearing up.
Taken from completed jobs rather than from how long it takes when everything goes well. The best case is not the average, and pricing on the best case loses money across a year.
Why both are needed
Hours multiplied by cost gives the labour figure in an estimate. Either one wrong scales the error across every job of that type — which is invisible until job costs are compared against estimates, in job margin variance.
Building the rates
Start from the jobs done most often. A handful of tasks usually covers most of the work, and rates for those carry most of the value.
Revise them when the work changes — new equipment, a different method, a different crew. A rate set for a two-person crew does not describe a one-person job.
Where they get used
Every estimate, and every price on a rate card. They are the inputs beneath both, and the reason two businesses quoting the same job arrive at very different numbers.