Hourly rate calculator: what to charge, and what to quote
Enter what you want to pay yourself, your yearly business costs and the hours you can actually bill. The calculator gives your break-even hourly rate and the rate to charge for your target margin. Then it prices a job from hours, materials and costs.
The calculator needs JavaScript. The formulas below let you do it by hand.
How it works
- Break-even rate = (what you pay yourself + yearly business costs) ÷ paid hours per year
- Paid hours per year = paid hours per week × weeks worked
- Rate to charge = break-even rate ÷ (1 − target margin)
- Job quote = (job hours × break-even rate + materials + other job costs) ÷ (1 − target margin)
Example: you want $60,000 a year, your business costs $24,000 a year, and you bill 30 hours a week for 48 weeks. That’s 1,440 paid hours. Your break-even rate is $84,000 ÷ 1,440 = $58.34 an hour. With a 20% margin, you’d charge $72.93 an hour.
A 3.5-hour job with $180 of materials and $20 of other costs then costs you $404.19. Quoted at a 20% margin, that’s $505.24.
Paid hours are the number to get right
Count only hours a customer pays for. Driving, quoting, ordering parts, invoicing and callbacks all take time nobody pays for. If you work 50 hours a week but bill 30, use 30. Using 40 when you really bill 30 makes your rate a quarter too low.
Why you need a margin as well
The break-even rate already pays you. The margin is the share of the price the business keeps after that: money for slow months, new equipment, or hiring. A job priced at break-even leaves nothing for any of those.
What this doesn’t do
It doesn’t handle tax, and it doesn’t know your local market rates. Check what similar businesses near you charge before you settle on a number. It’s the math on the numbers you enter, nothing more.
This is math on your inputs, not financial advice. Check with your accountant or attorney for your situation.