True Hourly Rate Calculator
Based on 1,440 billable hours/year.
For planning and education only — not financial advice. Results depend on the figures you enter.
What you charge isn’t what you keep
Most contractors set their hourly rate by guessing — matching what the guy down the road charges, or padding their old wage by a few bucks. The number that actually keeps you in business comes from three things: the pay you want to take home, the overhead it takes to run the business, and how many hours you can realistically bill in a year. This calculator works backward from those to the rate you need to quote.
Why “billable” hours matter
You might work 50 hours a week, but you don’t bill all 50. Driving, quoting, invoicing, callbacks, and dead time aren’t billable. If only 30 of those hours land on an invoice, your rate has to cover the whole business across those 30 — not 50. Lowballing your billable-hours number is the most common reason a rate that “felt fine” still leaves nothing at year-end.
The math
Break-even rate = (desired pay + annual overhead) ÷ billable hours per year. Then we layer your target profit on top as a margin: charge-out rate = break-even rate ÷ (1 − profit margin). That’s the rate that pays you, keeps the lights on, and leaves a real profit.
Frequently asked questions
How many billable hours should I assume? Be honest and conservative — most owner-operators bill 25–35 hours of a 40–50 hour week once you remove travel, admin, and quoting. It’s safer to under-estimate.
Does this replace job-by-job pricing? No — it sets your floor. Price individual jobs with the Markup vs. Margin Calculator, and check whether your overall revenue covers the business with the Break-Even Calculator.
Related: Markup vs. Margin Calculator · Break-Even Calculator · Job-Costing & Profit Tracker — see whether each job actually hit the rate.