Contractor Hourly Rate Calculator
This calculator finds the hourly rate your trade business needs to charge to cover its true costs and hit a target profit. It separates your break-even rate from the rate you should actually bill.
Insurance, vehicle, tools, software, rent, phone.
Not total hours — exclude admin, driving, downtime.
Suggested hourly rate
$125.00
Break-even rate adjusted for your target margin.
Break-even rate
$100.00
Revenue needed / yr
$150,000
Annual cost breakdown
- Owner compensation$80,000
- Overhead$40,000
How this calculator works
- Your total annual cost is owner pay + overhead + employee costs.
- The break-even rate divides that total by your realistic billable hours.
- The suggested rate divides the break-even rate by (1 − your target margin) so profit is built into the price, not added as markup.
Worked example
If your costs are $120,000 and you bill 1,200 hours a year, your break-even rate is $100/hour. Target a 20% margin and you should charge $125/hour ($100 ÷ 0.8), requiring $150,000 of annual revenue.
Assumptions & limitations
- Billable hours exclude admin, driving, quoting, and downtime — be realistic.
- Target margin is capped at 99% to keep the math stable.
- This is margin (profit as a share of price), not markup (profit as a share of cost).
Disclaimer
This is an educational estimate, not financial advice or a guaranteed quote. Your actual rate depends on your market, trade, and overhead.Calculator FAQ
What billable hours should I use?
Use the hours you can actually invoice, not a 40-hour week. Many full-time tradespeople bill far fewer hours than they work once admin and drive time are removed.
Is the suggested rate what I must charge?
It's a floor that covers costs plus your target profit. Your market may support more; charging less than the break-even rate means losing money on every hour.