Free Hourly Rate Calculator for Contractors
Stop guessing what to charge. This calculator uses Roger Wakefield's proven method to figure out your true hourly rate — factoring in your salary, overhead, billable hours, AND profit margin. Know your numbers or go broke trying.
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 your working hours. This calculator accounts for that.
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 with 1M+ YouTube subscribers who teaches one core principle: know your numbers or go broke. His approach to pricing — understanding your true costs, billable hours, and profit margin BEFORE setting rates — is what this calculator implements.
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 ÷ 3 hours = $133/hr effective rate.
📊 Show the Math
Total Annual Cost: $100,000 + ($2,500 × 12) = $130,000
Revenue Needed (Divisor Method): $130,000 ÷ (1 - 20%) = $162,500
Billable Hours: 2,080 hours × 55% = 1144 hours
Required Rate: $162,500 ÷ 1144 hours = $142/hr
Why the Divisor Method? The markup method (Cost × 1.2 for 20% profit) gives you 20% of your cost. The divisor method (Cost ÷ 0.80) gives you 20% of your price—real profit margin.
Tool powered by Blessed Arc Media - Web Design for Home Service Businesses
How the Calculator Works
No black box. Here's exactly how we calculate your required hourly rate.
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: January 2025
We review this calculator quarterly to ensure accuracy.
Built by: Blessed Arc Media
Web design for home service businesses since 2024.
How Do I Use This Calculator?
Access this tool instantly from your phone, or add it to your website to help your audience.
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Built for Every Trade
The calculator includes presets for common trades with typical overhead and efficiency rates. Use them as a starting point, then adjust to match your actual numbers.
Plumber
$2,500/mo overhead, 55% efficiency
Includes van, tools, licenses, insurance
Electrician
$2,000/mo overhead, 60% efficiency
Lower material costs, more efficient routing
HVAC Tech
$3,000/mo overhead, 50% efficiency
Specialized equipment, seasonal fluctuation
General Contractor
$3,500/mo overhead, 45% efficiency
More coordination, less direct billing
What Do Contractors Actually Charge?
These are billing rates (what you charge customers), not employee wages. Rates vary widely by location, experience, and whether you're residential or commercial.
Why averages don't matter: A plumber in rural Texas has different costs than one in San Francisco. The calculator above figures out YOUR rate based on YOUR numbers.
Sources: HomeAdvisor Plumbing, HomeAdvisor Electrical, BLS HVAC Data (2024)
What Makes This Calculator Different
Most hourly rate calculators just divide your costs by 2,080 hours. That math is wrong — you're not billing 40 hours a week. This calculator factors in the reality of running a trade business.
What makes this different
Billable Efficiency Factor
Most calculators assume you bill 40 hours/week. Reality: you're lucky to bill 50-60% after drive time, estimates, and admin. This calculator accounts for that — because the math matters.
Correct accounting
Divisor Method (Not Markup)
Adding 20% markup ≠ 20% profit margin. We use the divisor method ($100 ÷ 0.80 = $125) that accountants use. It's the difference between thinking you're profitable and actually being profitable.
The moment of truth
Reality Check Comparison
Enter what you're charging now and see the gap. Most contractors are shocked to learn they're losing $10-30 per hour. The calculator shows you exactly how much you're leaving on the table.
Common Questions About Pricing Your Work
Everything contractors ask about calculating their hourly rate.