Free Hourly Rate Calculator for Contractors
Plug in your salary, your overhead, the hours you can actually bill, and the margin you want. This gives you the real hourly rate you need to charge so you don't go broke.
Built for plumbers, HVAC technicians, electricians, handymen, painters, roofers, general contractors, and all service trades.
This calculator is for you if…
Why Most Contractors Undercharge
They Forget to Pay Themselves
Your rate needs to cover a real salary: what you'd pay someone else to do your job. Not just "whatever's left over."
They Think 40 Hours = 40 Billable Hours
Drive time, estimates, callbacks, paperwork: you're lucky to bill 50-60% of the hours you work. This calculator does that math for you.
They Aim for Break-Even
Covering costs isn't profit. You need margin for slow seasons, broken equipment, and actually growing your business.
They Use Markup Instead of Margin
Adding 20% markup is NOT the same as 20% profit margin. This calculator uses the correct divisor method that accountants use.
Inspired by Roger Wakefield's "Know Your Numbers" Philosophy
Roger Wakefield is a master plumber who teaches tradespeople to know their numbers. This calculator runs the pricing math he teaches.
Are You Working for Free?
Find out if you're actually making money or paying customers to let you work for them.
This is what you want to pay yourself annually before taxes. Think of it as your "owner's salary" separate from business profit. Include what you need for mortgage, bills, savings, and lifestyle.
Your fixed monthly business expenses: vehicle payment, insurance, fuel, tools, uniforms, phone, software subscriptions, licenses, warehouse rent, etc. Don't include job materials; those get billed separately.
Be honest!You don't bill while driving to the supply house. Most technicians can only bill 4-5 hours per 8-hour day.
This is your profit after paying yourself and all expenses. Industry standard is 10-20%. Higher margins give you a buffer for slow seasons, equipment breakdowns, and business growth.
Your Required Rate
$142/hr
to earn $100,000/year at 20% margin
Revenue Needed
$162,500
Billable Hours
1144
Enter what you actually charge customers per hour. If you use flat-rate pricing, divide your typical labor charge by the hours that job takes. For example: $400 labor divided by 3 hours = $133/hr effective rate.
Show the Math
Total Annual Cost: $100,000 + ($2,500 x 12) = $130,000
Revenue Needed (Divisor Method): $130,000 divided by (1 - 20%) = $162,500
Billable Hours: 2,080 hours x 55% = 1144 hours
Required Rate: $162,500 divided by 1144 hours = $142/hr
Why the Divisor Method? The markup method (Cost x 1.2 for 20% profit) gives you 20% of your cost. The divisor method (Cost divided by 0.80) gives you 20% of your price for real profit margin.
Tool powered by Blessed Arc Media - Web Design for Home Service Businesses
How the Calculator Works
Nothing hidden. Here's exactly how the rate gets calculated.
The Divisor Method (Not Markup)
Step 1: Total Annual Cost = Salary Goal + (Monthly Overhead × 12)
Step 2: Revenue Needed = Total Annual Cost ÷ (1 - Target Margin %)
Step 3: Billable Hours = 2,080 hours × Efficiency %
Step 4: Required Rate = Revenue Needed ÷ Billable Hours
Why divisor, not markup?Adding 20% markup to $100 gives you $120. But that's only 16.7% profit margin on the sale price. The divisor method ($100 ÷ 0.80 = $125) gives you a true 20% margin. This is how accountants calculate it.
Key Assumptions
- •2,080 hours/year: 40 hours/week × 52 weeks (no vacation/sick time adjustment)
- •Billable efficiency: Most trades realistically bill 45-65% of their working hours
- •Profit margin: This is profit AFTER paying yourself: money for growth, emergencies, slow seasons
What This Calculator Doesn't Include
- • Self-employment tax (15.3% in the US)
- • Workers' compensation insurance
- • Health insurance premiums
- • Retirement contributions
- • Vacation/sick time (uses full 2,080 hours)
- • Material costs (assumed billed separately)
Recommendation: Add 15-20% to your overhead estimate to account for taxes and benefits, or increase your target margin accordingly.
Last updated: March 2026
Built by: Blessed Arc Media, web design for home service businesses since 2024.
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Common Questions About Pricing Your Work
Everything contractors ask about calculating their hourly rate.