Hourly Rate Calculator
“What should I charge per hour?” Work it out from the numbers that matter — the pay you want, your real overhead, and the hours you can actually bill — not what the guy down the street charges.
Most contractors bill far fewer hours than they work — quoting, driving, and admin aren't billable. Base your rate on the hours you actually invoice, or you'll come up short every month.
Why the shop rate down the street is the wrong anchor
Matching a competitor’s hourly rate assumes you have the same overhead, the same billable hours, and the same income goals. You don’t. Your rate has to cover your pay, your business’s overhead, and a profit on top — worked back from hours you can realistically invoice.
Bill fewer hours than you work
This is where most contractors come up short. A 40-hour week rarely means 40 billable hours — quoting, driving, invoicing, and admin eat a big chunk. If you can bill 30 hours a week across 48 weeks, that’s your denominator, and it’s a lot smaller than 2,080.
Cover pay, overhead, and profit
Your break-even rate just covers your target pay plus overhead. Your recommended rate adds a profit margin on top so the business itself gets ahead — funding new tools, a truck, a first hire, or simply a cushion. This tool shows both so you can see the gap.
Frequently asked questions
How do I calculate my hourly rate as a contractor?
Add the annual pay you want to the cost of running your business (overhead), then divide by the hours you can actually bill in a year. Divide that by (1 − your target profit margin) to build in profit. This calculator does the math for you.
How many billable hours are in a year?
Far fewer than the ~2,080 in a 40-hour work year. After quoting, driving, admin, time off, and slow days, many solo contractors bill 1,200–1,600 hours a year. Use a realistic number — overestimating it is the fastest way to underprice.
Should my hourly rate include profit?
Yes. Paying yourself a wage isn’t the same as the business making a profit. Build a profit margin into your rate so the company can absorb surprises and grow, rather than just breaking even.
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