Contractor hourly rate calculator

Most contractors set their hourly rate by asking what the other guy charges. That is how an entire trade ends up underpriced together. This calculator works it out from the only numbers that matter: what you need to earn, what it costs you to show up, and how many hours you can actually bill.

Nothing is sent anywhere. It runs in your browser, there is no signup, and we cannot see what you type.

The number that ruins most rates: billable hours

This is where nearly everyone gets it wrong, so it is worth being blunt about it.

You work, say, 45 hours a week. You do not bill 45 hours a week. You bill the hours you are on a job with a tool in your hand. You do not bill the drive between jobs, the trip to the supply house, the quote you wrote that did not land, the hour on the phone with a customer who is deciding, the invoicing on Sunday night, or the morning you spent chasing an unpaid bill.

For most one-person trade businesses that lands somewhere between 55% and 70%. If you have never measured it, start at 65% and be suspicious if you think you are higher. A contractor who believes they bill 90% of their hours and actually bills 60% has set their rate a third too low — and will work themselves into the ground wondering why the money never arrives.

Overhead is not optional and it is not small

Overhead is everything you pay for whether or not you work a single day this month. The van and its payments, fuel, insurance (vehicle, liability, tools), your phone, tool replacement and repair, licensing and continuing education, the accountant, software, advertising, and the yard or storage if you have one.

Add it up honestly once a year. Most contractors underestimate it by thousands, and every dollar you miss is a dollar you are paying out of what you thought was your wage.

Why the profit margin is separate from your pay

Your target earnings are your wage — what you take home for doing the work. Profit is different: it is what the business makes on top of paying you and its costs. It is what buys the second van, survives the slow February, replaces the compressor when it dies on a Friday, and eventually pays you when you are not the one swinging the hammer.

A business with no margin is a job with extra paperwork and more risk. 15–25% is a reasonable place to start.

What to do with the number

Treat it as a floor, not a price list. It is the rate below which you are, arithmetically, working for less than you decided you were worth. Above it, you have room to move — for a job you want, a client who pays fast, or work in a season when you would otherwise be idle.

And do not quote it. The rate is for you, so you know what a job needs to earn. Most customers should see a price for the job, not an hourly rate to argue with. Our guide to writing an invoice covers how to present it.

A worked example

Take a plumber who wants $75,000 take-home, has $18,000 of overhead, works 48 weeks at 45 hours, bills 65% of those hours, and wants a 20% margin.

That is 2,160 hours worked, of which 1,404 are billable. They need $93,000 to cover their pay and their costs, which is about $66/hr just to break even. With a 20% margin, the rate is roughly $83/hr — and every hour they bill under that is an hour they are subsidising the customer.

Now look at the "unbilled hours" box in the calculator. That is 756 hours a year — about 19 working weeks — spent driving, quoting, invoicing and chasing. You cannot get rid of all of it, but the invoicing and chasing part is the part you can shrink, and that is worth as much to you as a rate rise.

What the trades typically charge per hour

For reference only — a sense check against the number above, not a target. These are typical US market ranges for labour, and they vary enormously by region, licence and demand. If the calculator says you need more than the top of your trade's range, that is not necessarily wrong: it may mean your overhead is too high, your billable percentage is too low, or you are in a market that will not support what you need. All three are worth knowing.

Questions people ask about this

Should I charge hourly or a flat price for the job?

Quote flat prices to customers wherever you can, and use your hourly rate privately to check the job is worth doing. Customers hate an open-ended hourly meter, and it punishes you for being fast — which, as you get better, you increasingly are.

My calculated rate is higher than everyone else in my area. Now what?

Then either your costs are higher than theirs, your billable percentage is worse, or they are underpricing and do not know it. The third is more common than people think. Do not automatically drop to match a number someone else picked out of the air.

Does this work for a crew, not just one person?

Roughly. Run it once per billable person, with that person's wage as the target and their share of overhead. It gets less accurate the bigger you get — at that point you need job costing, not a web calculator.

Is anything I type here stored?

No. It runs entirely in your browser. Nothing is sent to us, and there is no signup.