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EspañolWhat should you actually charge?
Counts the hours you pay for but never bill, prices labor at what it really costs, and treats margin as margin rather than markup. Change anything and the answer moves as you type.
Where you stand
You charge $85.00/hr. You need $113.56/hr.
At your current rate you are losing $27,432 a year. That is $28.56/hr short of covering your costs and the margin you asked for.
Every cost covered, zero profit.
Show the arithmetic
- Loaded cost per hour = $25.00 wage × (1 + 30% burden) = $32.50
- Paid hours = 2 × 40 hrs × 48 weeks = 3,840
- Labor cost = 3,840 paid hours × $32.50 = $124,800
- Total cost = $124,800 labor + $45,000 overhead + $60,000 your pay = $229,800
- Billable hours = 3,840 × 62% = 2,381
- Break-even = $229,800 ÷ 2,381 billable hours = $96.52
Labor is costed on all 3,840 paid hours but recovered over only 2,381 billable ones. That gap is what most calculators drop.
Break-even plus a real 15% net margin.
Show the arithmetic
- Target = break-even ÷ (1 − margin)
- = $96.52 ÷ (1 − 15%)
- = $96.52 ÷ 0.85 = $113.56
Divided, not multiplied. Multiplying $96.52 by 1.15 gives $111.00 — which earns 13%, not 15%. That is markup wearing margin's name, and it is the single most common way a rate ends up quietly short.
1,459 paid hours a year never reach an invoice — driving, quoting, callbacks, parts runs, paperwork.
Show the arithmetic
- Paid = 2 people × 40 hrs × 48 weeks = 3,840
- Billable = 3,840 × 62% utilization = 2,381
- Unbilled = 1,459
A $25.00 wage costs you $32.50 once burden lands.
Show the arithmetic
- $25.00 × (1 + 30%) = $32.50
- Burden adds $7.50 per hour
Burden is payroll tax, workers' comp, PTO and benefits. Pricing off the wage instead of this number under-prices by roughly the burden rate.
Labor only, at your target rate. Materials, equipment and subcontractors are priced on top.
Show the arithmetic
- $113.56 target rate × 2 hours = $227
- At your current $85.00: $170
What utilization does to your break-even
Same crew, same wage, same overhead. The only thing changing is how much of the paid day reaches an invoice.
| Billable utilization | Break-even rate | vs now |
|---|---|---|
| 52% | $115.08 | +$18.56 |
| 57% | $104.99 | +$8.47 |
| 62%you now | $96.52 | — |
| 67% | $89.32 | −$7.20 |
| 72% | $83.12 | −$13.41 |
If moving five points of utilization changes your break-even more than a price rise would, the cheaper fix is the schedule, not the invoice.
Your inputs live in the link and nowhere else — no account, nothing stored. Send it to a partner and they see exactly this.
Email me this breakdown
The answer above is already yours — this just sends you a copy to keep. It opens your own mail app with the numbers filled in; we never see the address.
This tells you what to charge. It can't tell you whether you did. Spanstead Works tracks it job by job, against real labor and material cost.
The number that decides your rate
Billable utilization is the whole argument.
A field employee paid for forty hours does not put forty hours on invoices. Drive time, parts runs, quotes that never sell, callbacks, warranty visits and paperwork all come out of the same week. What survives is billable utilization, usually 55% to 70% in small field service businesses. On the defaults above — 62% across 2 people — that is 2,381 billable hours a year out of 3,840 you pay for. The other 1,459 are paid and never invoiced.
So the cost side has to use every paid hour while the recovery side can only use the billable ones. Collapse the two into a single number, as most rate calculators do, and the shortfall leaves the arithmetic without leaving the bank account.
Second, an hour costs more than the wage. Payroll taxes, workers' compensation, paid time off and benefits commonly add 25% to 40% — 30% here, which turns $25.00 into $32.50. Price off the wage and you are under by that much before overhead.
Third, margin is division. To earn 20% you divide break-even by 0.80, not multiply by 1.20. Multiplying $100 gives $120, and $20 on $120 of revenue is a 16.7% margin. Both formulas look plausible; only one produces the margin you asked for.
Which is what the sensitivity strip above is for. A price rise means a conversation with every customer. Utilization means none, and on typical numbers moving it five points beats a five percent price increase. Tighter routing, quoting from the office, a stocked van, fewer callbacks — each turns hours you already pay for into hours you can bill.
One caution: this is not a market check. It tells you what your own costs and goals require, not what customers will pay. If the number lands far above your local market, that usually means overhead is too high for the crew size or utilization is too low — rarely that the arithmetic is wrong.
Straight answers
Questions people actually ask
What should I charge per hour as a contractor?
Work it out from your own costs rather than from what the shop across town charges. Add your loaded labor cost for a year, your overhead, and the salary you must actually be paid. Divide that total by the hours you genuinely bill customers for, not the hours you pay people for, which is a much larger number. That gives your break-even rate. Then divide by one minus your target margin to get the rate you should charge. On typical small-shop numbers this lands somewhere between $95 and $175 an hour, and the single biggest reason it differs between two similar businesses is billable utilization.
What is billable utilization and why does it matter so much?
Billable utilization is the share of paid hours that actually reach an invoice. A technician paid for 40 hours typically bills 24 to 28 of them; the rest is driving between calls, quoting work that may never sell, callbacks, warranty visits, parts runs and paperwork. It matters more than any other input because you pay for every hour but only recover cost from the billable ones. Moving utilization five percentage points usually changes your break-even rate more than a five percent price rise does, and it requires no conversation with any customer.
How do I calculate labor burden?
Labor burden is everything a paid hour costs on top of the wage: employer payroll taxes, workers' compensation, unemployment tax, paid time off and any benefits. The quickest way to find yours is to take total employer cost from a payroll report and subtract gross wages, then divide by gross wages. In the trades it commonly lands between 25% and 40%, driven largely by workers' compensation rates which vary enormously by classification code and state. Pricing off the wage instead of the loaded figure under-prices every hour by that percentage.
Is a 20% markup the same as a 20% margin?
No, and confusing the two is the most common arithmetic error in trade pricing. Markup is added to cost; margin is a share of the price. A $100 cost marked up 20% sells for $120, and $20 of profit on $120 of revenue is a 16.7% margin. To earn a genuine 20% margin you divide by 0.80, which gives $125. Both formulas produce a plausible-looking number, so the error is rarely noticed. It just shows up as a business that is busier than it is profitable.
What if I don't know my overhead or my utilization?
Use a starting point and correct it. Overhead is knowable from last year's profit and loss: total expenses minus field payroll minus your own pay. Utilization takes one afternoon: pick three or four recent weeks, add the hours you invoiced, and divide by the hours you paid for. Until you have those numbers, this calculator marks every value it filled in as an assumption so you always know which parts of the answer are yours and which are ours.
Does this work for HVAC, plumbing, landscaping and cleaning?
Yes. The arithmetic is the same for all of them; what differs is the inputs. Licensed trades like HVAC, plumbing and electrical carry higher wages and burden and lower utilization, because permit time, quoting and callbacks eat into the day. Route-based work like pest control and commercial cleaning runs the highest utilization in field service, often above 70%, because the stops are dense and the travel is short. Handyman work sits lowest, since short jobs mean more drive time per billed hour. The trade presets in the calculator load a plausible starting shape for each.
Know what a job actually made you
A rate is a plan. Spanstead Works records what actually happened against it: labor, materials, and the payment that closed the job. So the next quote starts from what the last one really cost.