Contractor Hourly Rate Calculator
Work out what you need to charge per hour to pay yourself, cover the costs of running the business and still make a profit. It uses your own numbers, so it works for any trade.
Calculator
The starting numbers are only examples. Replace every one with your own.
How to use it
- Pay you want: what you'd like to take home from the business before personal income tax.
- Yearly overhead: everything the business pays for that isn't billed to a job. Think truck payments, fuel, insurance, tools, phone, software, licenses, advertising and bookkeeping. Your last year's bank statements are the quickest way to get this number.
- Weeks and hours: be honest about vacation, sick days and slow weeks.
- Billable share: the part of your working hours you can actually charge for. Driving, quoting, picking up parts and paperwork all eat into it.
- Profit margin: money left for the business after you're paid, for growth and rainy days.
How the rate is worked out
First it finds your billable hours: weeks × hours a week × billable share. Then it divides your pay plus overhead by those hours. That's your break-even rate. Charge less and you're losing money on every hour.
Last, it adds your profit margin on top: rate = break-even ÷ (1 − profit margin). Margin here is a share of the price, the same way the markup vs margin calculator works.
The billable share is the number most people get wrong. If you work 45 hours but only bill 30, your real rate has to cover all 45.
When you've got your rate, use it on a contractor quote template or a contractor invoice template.
Questions
Should I include materials in overhead?
No. Materials for a job get billed to that job, usually with a markup. Overhead is the cost of keeping the business running whether or not you have work booked.
What if I have employees?
This calculator is set up for one person's billable hours. With a crew, work out a rate for each person and include their wages and payroll costs in the numbers.
Is anything I type saved or sent?
No. The math runs in your browser and nothing is uploaded.
Templates and calculators are for general use only and are not legal, tax or accounting advice.