For contractors Business owners What to charge

Contractor Billable Hourly Rate Calculator

Find the minimum sell rate per billable hour so your pay (or tech wage), labor burden, non-billable time, overhead, and target net margin are covered. Built for owners setting a rate card — not for homeowners shopping prices.

Calculate your billable rate

Trade preset (example input defaults only — not a recommended rate)

Pay entry mode

Base wage or desired owner pay ($/hr) What you want to earn (or pay a tech) per paid hour before burden.

Labor burden (%) Enter percent points (35 for 35%, not 0.35). Example components: payroll taxes, WC, benefits, PTO — examples only, not advice.

Paid hours / year Default 2080 (editable). Includes paid non-billable time.

Utilization (% billable ÷ paid) Enter percent points (70 for 70%, not 0.70). Share of paid hours you can actually bill — example starting point, not a recommendation.

Annual overhead ($) Fixed costs allocated across billable hours (rent, insurance, software, etc.).

Target net margin on price (%) Enter percent points (20 for 20%, not 0.20). Margin-on-price — not markup. Sell rate = cost ÷ (1 − margin).

Current rate $/hr (optional) Blank = not provided. Enter 0 only if you currently charge $0.

Required sell / bill rate

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Break-even $/hr (before profit)

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Labor cost / billable hr

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Overhead / billable hr

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Profit $/billable hr at target

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Annual revenue at required rate

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Billable hours / year

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Equivalent markup % (educational)

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Gap vs current rate

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This calculator is a self-serve math tool for business owners. Tax, workers’ comp, and insurance figures you enter are yours; any UI defaults are examples only, not recommendations or advice. No consulting or custom estimates.

Methodology

One cost-up chain — wage → burden → utilization → overhead → margin-on-price → bill rate:

1. annual_wage = hourly_pay × paid_hours_per_year 2. burdened_labor = annual_wage × (1 + burden_pct) 3. billable_hours = paid_hours_per_year × utilization_pct 4. labor_per_billable = burdened_labor / billable_hours 5. overhead_per_billable = annual_overhead / billable_hours 6. cost_per_billable = labor_per_billable + overhead_per_billable 7. bill_rate = cost_per_billable / (1 − target_margin)

Margin-on-price means a 20% target margin on a $100 cost is a $125 sell rate (100 / 0.8), not $120. Markup is shown as an educational equivalent only.

Worked example (fictional owner-operator)

Input	Value
Hourly pay	$30.00
Labor burden	35% (example)
Paid hours / year	2,080
Utilization	70%
Annual overhead	$60,000
Target net margin	20%

Annual wage $62,400 → burdened $84,240 → billable hours 1,456 → labor/bh ≈ $57.86 → overhead/bh ≈ $41.21 → break-even ≈ $99.07/hr → required bill rate ≈ $123.83/hr (equivalent markup 25%).

Assumptions

Paid hours default 2,080 — a common full-time year; edit for your schedule or seasonality.
Utilization = billable ÷ paid. Travel, estimating, admin, and callbacks that you pay for but don’t bill reduce utilization.
Margin vs markup: this tool’s primary target is net margin on price; markup % is derived for clarity.
Trade presets only fill starting inputs. They are labeled examples — not “you should charge X.”
Burden components listed in hints are EXAMPLE labels only (not tax or insurance advice).
USD display with 2 decimal places. Profit shown equals rounded bill rate minus rounded break-even so tiles stay consistent.
Percent fields take percent points (enter 35 for 35%). Values like 0.35 are auto-corrected with a warning.

Common mistakes

Dividing annual pay by 2,080 and calling that your bill rate (skips burden, utilization, overhead, and profit).
Treating a markup % as if it were a margin % (20% markup ≠ 20% margin).
Ignoring non-billable time (utilization = 100% when it isn’t).
Forgetting overhead that must be recovered from billable hours.
Using cost × (1 + margin%) when you meant margin-on-price.
Entering 0.35 under a % field when you meant 35% — use 35 (the tool will warn and auto-correct if you slip).

FAQ

What’s the difference between paid hours and billable hours?

Paid hours are what you (or a tech) get paid for. Billable hours are what you can charge to customers. Utilization connects them: billable = paid × utilization.

What does labor burden include?

At a high level: costs on top of base wage such as payroll taxes, workers’ compensation, benefits, and paid time off. Exact mix varies — enter your own %; UI labels are examples only, not advice. Build the stack on the labor burden calculator and hand off here without double-counting.

Why margin-on-price instead of “add 20%”?

If you want a 20% profit margin on the sell price, you must divide cost by (1 − 0.20). Adding 20% to cost is a 20% markup, which is only about a 16.7% margin.

How much utilization should I use?

This tool does not recommend a utilization rate. Enter what your books show (or a conservative estimate). Preset defaults are starting points for exploration only.

Is the break-even rate the same as my bill rate?

No. Break-even covers labor (burdened + utilization) and overhead with zero profit. The required sell rate adds your target net margin on price.

How does this feed job pricing later?

Your required bill rate (and cost stack) pass into the job pricing calculator via URL params (bill_rate, cost_per_billable, margin) so quotes recover the same economics without double-counting overhead or margin on labor.

Can I use annual owner pay instead of an hourly wage?

Yes — toggle to annual pay. The tool converts with your paid hours/year so the chain stays consistent.

Is this for homeowners checking contractor prices?

No. This page is for contractors and home-service business owners deciding what to charge. It is not a “cost of service” shopping tool.