What should you charge per hour?
Start from what you want to take home, add what the business costs to run, and divide by the hours you can actually bill. Then add profit on top.
Once you know your rate, put it to work: Redline remembers it, and when a job's done it drafts the invoice total for you to check (invoicing is on Solo).
Try Redline freeHow the math works
Add up a year
Your target pay plus the yearly cost of the truck, fuel, insurance, tools, phone, software and licenses.
Count billable hours
Hours per week you can charge for, times the weeks you work. Driving, quoting and paperwork don't count.
Divide for break-even
The year's total over billable hours is your break-even rate: charge that and you cover your pay and costs, with nothing left over.
Add profit
Profit here is a share of the rate you charge, so the calculator divides break-even by one minus your profit percentage. At 15%, 15 cents of every dollar you bill is profit.
Worked example: billable hours move the rate most
$70,000 target pay, $24,000 a year of overhead, 48 working weeks and 15% profit, with different billable hours a week:
| Billable hours a week | Billable hours a year | Break-even rate | Rate to charge |
|---|---|---|---|
| 25 | 1,200 | $78.33 | $92.16 |
| 30 | 1,440 | $65.28 | $76.80 |
| 32 | 1,536 | $61.20 | $72.00 |
| 35 | 1,680 | $55.95 | $65.83 |
Example figures to show the math, not typical rates for any trade. Your own pay, costs and hours set your number.
What to watch for
- Billable hours are the number people guess high. Write down two normal weeks: the hours you could put on an invoice, not the hours you were out of the house.
- Take out holidays, vacation, sick days, weather days and the slow season when you count working weeks.
- Decide whether your target pay is before or after taxes and your own health insurance, and make sure those costs land in pay or overhead, not nowhere.
- This is the rate for your own hours. For a tech, start from what that person really costs you with the burdened labor rate calculator, then add overhead per billable hour from the overhead rate calculator.
- Drive time between calls is unbilled time. On service work, a trip charge recovers some of it.
- Rerun it when something big changes: a new truck payment, a new insurance bill, a second person.
Questions contractors ask
Why is my break-even rate so high?
Because billable hours are usually far fewer than hours worked. Every hour spent driving, estimating or chasing payments has to be paid for by the hours you can bill.
What's the difference between break-even and the rate to charge?
Break-even covers your pay and the cost of running the business and stops there. The rate to charge adds profit, which is what pays for a slow month, a new truck or the next hire. In the example, 15% profit turns $61.20 into $72.00.
Should I charge hourly or by the job?
Many trades quote a flat price per job and use an hourly rate to build it. Either way, knowing your hourly number tells you whether a flat price actually covers your time. The job profit calculator checks a finished job against it.
How many jobs a month does that rate need?
Run your monthly fixed costs and your average job through the break-even calculator to see how many jobs a month keep the lights on.
Can Redline invoice by the hour?
Yes, on Solo and up. Tell the chat "invoice Reilly for 6 hours at my rate plus $140 in parts" and it drafts one invoice for the total with a one-line description, for you to check. Once you approve it, the card pay link goes live. Mention your rate once and memory keeps it. See invoicing.
Related
Keep reading
- Burdened labor rate calculatorSee what an employee really costs per paid hour and per billable hour.
- Overhead rate calculatorOverhead as a share of revenue, per billable hour and as a markup on job cost.
- Trip charge calculatorSet a service call fee from round-trip miles, drive time and your own costs.
- Invoicing and card paymentsInvoice from the job in two taps or one message. Customers pay by card.