Hourly Rate Calculator
The rate you need isn't your salary divided by the hours in a year — because you don't get paid for every hour you work. Enter the pay you want, your overhead, and how much of your time is actually billable, and this tells you the honest rate to charge. Then take that number straight into any trade calculator as your labor rate.
Your numbers
Your rate is pay plus overhead, divided by the hours you actually bill
Almost every underpriced tradesperson makes the same mistake: they take the salary they want — say $60,000 — divide by 2,080 hours in a working year, get about $29 an hour, add a little for overhead, and call it a rate. The problem is that nobody bills 2,080 hours. Between driving to jobs, writing quotes that don't close, invoicing, buying materials, answering the phone, and the plain gaps between jobs, a busy solo operator bills maybe 65% of the hours they work. The other 35% is real, unavoidable, unpaid work.
So the honest math divides by billable hours. Take 60,000 of pay plus 18,000 of overhead, that's 78,000 a year you have to cover. Work 48 weeks at 40 hours and you're on the clock 1,920 hours — but at 65% billable, only about 1,248 of those hours earn money. Divide 78,000 by 1,248 and your break-even rate is $62.50 an hour, not $29. Charge $29 and you're not running a lean business — you're losing money on every hour and making it up out of your own paycheck.
The last step is profit. Your pay is already in the number as a cost, the way an employee's wage would be. Profit is separate — it's what keeps the business alive through slow months and eventually lets it grow beyond you. Dividing the break-even rate by (1 − your target margin) leaves that room. At a 20% margin, $62.50 becomes about $78 an hour. That's the number to carry into a trade calculator as your loaded labor rate.
Two worked examples
Solo handyman. He wants to take home $55,000 and runs about $14,000 a year in overhead — truck, insurance, tools, phone. He works 48 weeks at 40 hours, and honestly bills about 60% of that time because a lot of his day is driving and small-job quoting. Billable hours: 1,920 × 0.60 = 1,152. Break-even: 69,000 ÷ 1,152 = $59.90. With a 20% margin, his rate lands near $75 an hour. If he'd priced off scheduled hours he'd have charged $36 — and wondered every year where the money went.
House cleaner going solo. She wants $45,000, with $9,000 overhead — supplies, mileage, insurance, scheduling app. She works 50 weeks at 35 hours, and bills a high 75% because her drive times are short and jobs are booked back-to-back. Billable hours: 1,750 × 0.75 = 1,312. Break-even: 54,000 ÷ 1,312 = $41.16. A 20% margin puts her honest rate near $51 an hour — which, once she sees it, explains why the $30/hour she'd been quoting never left anything over.
Four ways the rate goes wrong
Billing off scheduled hours. The single biggest error, and the one this page exists to fix. If you don't discount for non-billable time, every other number you build on top is already too low.
Forgetting to pay yourself. Leaving your own pay out "until the business can afford it" means you're the cheapest labor on the job and the business looks profitable only because it's quietly underpaying you. Put your wage in from day one.
Treating profit as optional. A business that covers its costs exactly is one bad month from trouble. Margin is the cushion and the growth fund; it isn't greed, it's survival.
Overstating billable percentage. It's tempting to assume 85%. Track a real week — clock every quote, drive, and admin task — and most owners are surprised how far under that they land. When in doubt, use the lower number.
Frequently Asked Questions
How do I calculate my hourly rate?
Add the annual pay you want plus yearly overhead, divide by billable hours (not scheduled hours), then divide by (1 − target margin) to leave room for profit. This page does it and shows the math.
Why can't I just divide my salary by 2,080 hours?
Because you don't bill all 2,080. Quoting, driving, invoicing, and downtime are unpaid. At 65% billable, dividing by the full year sets your rate about a third too low.
What is a good billable-hours percentage?
For solo trades and service work, 55–70% is normal after driving, quoting, admin, and gaps between jobs. Office support pushes it higher; heavy unpaid marketing pulls it lower.
Should owner pay and profit be separate?
Yes. Your pay is a cost of the work, like any wage. Profit is what the business earns above every cost. Blend them and a slow month silently comes out of your paycheck.
Is this calculator really free?
Yes. No account, no email, no ads. It runs in your browser and the numbers you enter are never sent to us. We use basic traffic analytics, described in our privacy policy.
Estimates only: results are based on the numbers you enter. We work to keep the formulas accurate, but costs, taxes, and regulations vary by location — always verify your own numbers before making business decisions. MyPricingCalculator.com is not responsible for pricing or business decisions made with these tools.