What Should You Actually Charge Per Hour?
Most contractors set their rate by asking what the other guy charges, then quietly pay their own overhead out of their paycheck. Put your real numbers in and see the rate the business needs, line by line.
Your base rate
What one hour of your work has to earn so the business, not just you, comes out ahead.
Markup is not margin
This is the mistake that costs money on every single job. Type the percentage you have been quoting and see both readings of it side by side.
Price a job
Materials and direct costs plus markup, plus your hours at the rate from Step 1. Change the rate here if you want to test a number.
How many jobs a month does that take?
A rate is only real if you can sell enough hours at it. This is the volume your rate assumes.
Nothing you type is sent anywhere and no analytics event ever carries a number from this page. Estimates for planning, not tax or legal advice.
What should you charge per hour? Add the salary you want to a full year of overhead, divide by the hours you can honestly bill, then divide by one minus your profit margin. Longhand: ($70,000 + $18,000) ÷ 1,200 billable hours = $73.33 break-even, and $73.33 ÷ 0.90 = $81.48 an hour. For most licensed trades in 2026 the answer lands between $75 and $150 an hour, even when the owner only pays themselves $30 to $40 of it.
And do not confuse markup with margin. A 30% markup is a 23.1% margin. On a $10,000 job that is $2,307.69 of profit instead of $3,000 — you are $692.31 short before you count anything else.
Know your real numbers — the rest of the family
Why do busy contractors still end up broke?
Because underpricing does not look like underpricing from the inside. The phone rings, the schedule is full, the deposits land, and the bank balance still goes sideways. Nothing about a full week tells you that every job is shipping thirty or forty dollars of unpaid overhead out the door with it.
Three habits cause almost all of it. The first is pricing off the competition instead of off your own costs. You do not know what the other guy's truck payment is, whether he carries insurance, or whether he is quietly going under. Copying his number copies his mistakes.
The second is pricing against 40 hours. You bill 25 and you priced for 40, so 15 hours a week of drive time, quoting and paperwork get done for free. Over a 48-week year that is 720 hours you worked and nobody paid for. At an $81 rate that is $58,000 of work given away, which is why the schedule can be full and the account can still be empty.
The third is markup and margin. A contractor posting on r/Contractor in June 2026 described two years of it: "I kept underpricing jobs for 2 years until I learned the difference between markup and margin… I was quoting jobs at '30% profit' and wondering why I was barely breaking even. Turns out I was confusing markup with margin. A 30% markup is only a 23% margin. On a $10k job that's $700 you're leaving on the table. Every. Single. Job." The same thread showed there is no shared vocabulary in the trade at all: one commenter reports seeing "50-100% mark up on material," another insists "I run a 50% markup on labor and material. Labor is a cost. Not profit." Those two people are not describing the same business, and neither of them is describing a margin.
None of this is a maths problem. It is a bookkeeping problem that shows up as a pricing problem eighteen months later, usually the month a transmission goes.
What do the paid tools charge to work this out for you?
Every serious job-costing and pricing feature in this category sits behind a subscription, and the prices moved hard in 2026. These are list prices as of August 2026, taken from the vendors' own pricing pages.
| Product | Price (Aug 2026) | What you get | What it does better than this page |
|---|---|---|---|
| QuickBooks Online Plus | $140/mo after the Aug 1 2026 increase, up from $99 | Job costing, class tracking, the accountant handoff | Real books. Bank feeds, P&L by job from actual transactions, and your bookkeeper already lives in it |
| QuickBooks Online Advanced | $340/mo, up from $200 — a 70% jump with no grandfathering | Adds labor burden costing and custom reporting | Burden calculated from your real payroll, not typed in by hand |
| Jobber Grow | $199/mo monthly, $169 annual, plus $29/mo per extra user | Quoting, scheduling, invoicing, quote follow-ups | Sends the quote, chases it, and books the job. This page only tells you what number to put on it |
| Housecall Pro MAX | $329/mo for up to 8 users, then $35/user | Price book, dispatch, payments. Price Book is a further $149/mo | A priced catalogue your techs sell from in the field |
| Buildertrend | $800/mo paid annually, per a GC's published quote | Full construction management with estimating | Everything, if you are big enough to need everything |
| Procore | $500/mo for the project management module alone; financials another $300–500 | Enterprise construction management | Built for jobs with a project manager on them |
| QuoteIQ | $29/mo | Per-trade "what should I charge" pricing guidance | Trade-specific price points you can borrow instead of building |
| Takeoff estimating software | $200–$500/mo typical | Measures off plans and prices the take-off | Quantity take-off from drawings, which no browser tool does |
Prices from vendor pricing pages and published contractor quotes, compiled August 2026. QuickBooks Online increases took effect 1 August 2026: Essentials $60 to $85, Plus $99 to $140, Advanced $200 to $340. Jobber raised Core from $39 to $49 in July 2026. Prices in this category move every summer, so check before you sign.
Two things are worth saying plainly. Those products are not overpriced for what they do — a shop running four trucks needs dispatch and a price book, and $199 a month is cheap against one mispriced job. And the complaints that follow them are not about the price so much as the exit. QuickBooks users cut off after cancelling report being "basically stuck - held hostage." Joist users of eight years report they "can not even log into their account… without having to pay." Housecall Pro requires a phone call with the account owner to cancel, and one reviewer wrote: "I cancelled my subscription 4 times now. I've had to go to my bank to get a credit." A number you worked out yourself, on paper, cannot be revoked.
Where is this free calculator genuinely enough?
It is enough if you are one to three people, you quote your own work, and your jobs are measured in hours and days rather than months. If you can describe a typical job in one sentence and you know roughly what materials run, this page will get you a defensible rate in about five minutes, and the rate will be closer to right than the one you are using now.
It is enough when the question is "am I charging too little," which is a question about arithmetic, not about software. Most people who ask it are out by 20 to 40%, and you do not need a $340-a-month subscription to find a 30% error.
It is not enough in four situations, and pretending otherwise would waste your time.
- You have employees. Then your labor cost is not your own salary divided by hours. It is wages plus payroll taxes plus workers comp plus paid time off, and it needs the employee cost calculator instead.
- You need after-the-fact job costing. This prices a job before you do it. Comparing the quote to what the job actually cost needs your real transactions, which means books, which means QuickBooks or a spreadsheet you keep religiously.
- Long jobs with draws and retainage. A four-month remodel with progress billing has cash-flow problems this page does not touch.
- You want the tool to send the quote. It cannot. Nothing here leaves your browser. Use the estimate generator to turn the number into a document you send yourself.
How do you use this calculator?
- Set the salary you want. Not what you survived on last year. What you would earn on somebody else's payroll doing the same work is a fair floor, and most owners set this too low out of habit.
- Add up monthly overhead honestly. Truck payment, fuel, general liability, tools and their replacement, software, phone, licenses, accounting, marketing. The test for overhead is simple: does the bill arrive in a month when you did no work? If yes, it belongs here.
- Count only billable hours. Hours a customer pays for. Start at 25 a week, then correct it next month from your own calendar rather than from what you wish it looked like.
- Keep a profit margin. 10% is a floor, not greed. Profit is what survives a slow February, a blown transmission, or a job that goes sideways. It is separate from your salary, which is already in line one.
- Check your percentage in Step 2. Type the number you have been quoting. If the margin reading surprises you, that is the whole point of the page.
- Price a real job in Step 3, then check volume in Step 4. Quote a flat price to the customer, never an hourly number they can argue with. Then make sure the jobs-per-month figure fits in a calendar you actually have.
What is the difference between markup and margin?
Markup is measured against your cost. Margin is measured against your price. That single sentence is worth real money.
Work it in dollars, because percentages hide the problem. A job costs you $7,692.31 in materials, subs and labor. You add 30% markup: 30% of $7,692.31 is $2,307.69, so you charge $10,000. Now look at what you kept as a share of what the customer paid: $2,307.69 ÷ $10,000 = 23.1%. You quoted thirty and you kept twenty-three.
To actually keep 30% of a $10,000 price you need $3,000 of profit. You are $692.31 short on that one job. That is the "$700 you're leaving on the table" the contractor on r/Contractor was describing, and it is per job, forever, until somebody explains the arithmetic.
Going the other way: to keep a true 30% margin on that same $7,692.31 of cost you would have to price the job at $7,692.31 ÷ 0.70 = $10,989.01, which is a 42.9% markup. Same profit target, wildly different number on the quote.
The two formulas, longhand:
- margin = markup ÷ (1 + markup) — so 0.30 ÷ 1.30 = 0.231, or 23.1%.
- markup = margin ÷ (1 − margin) — so 0.30 ÷ 0.70 = 0.429, or 42.9%.
Print this table and tape it inside the truck door.
| If you add this markup | You keep this margin | If you want this margin | You need this markup |
|---|---|---|---|
| 5% | 4.8% | 5% | 5.3% |
| 10% | 9.1% | 10% | 11.1% |
| 15% | 13.0% | 15% | 17.6% |
| 20% | 16.7% | 20% | 25.0% |
| 25% | 20.0% | 25% | 33.3% |
| 30% | 23.1% | 30% | 42.9% |
| 35% | 25.9% | 35% | 53.8% |
| 40% | 28.6% | 40% | 66.7% |
| 45% | 31.0% | 45% | 81.8% |
| 50% | 33.3% | 50% | 100.0% |
| 60% | 37.5% | — | — |
| 75% | 42.9% | — | — |
| 100% | 50.0% | — | — |
Two things fall out of that table. Doubling your money is a 100% markup and only a 50% margin, which is why "I double material" sounds aggressive and is not. And the gap between the two columns widens as the numbers climb, so the higher your target, the more expensive the confusion gets.
Which one should you use?
Quote in markup because that is how you build a price from the bottom up, but judge the job in margin because that is how the money reads on a bank statement. If somebody asks what you make on a job, they mean margin. If somebody tells you they "make 50 percent," ask which one they mean. Half the time they do not know.
Why does 25 billable hours a week change everything?
The rate calculation has one input that swings it more than everything else, and it is not salary. Hold $70,000 of salary and $18,000 of overhead flat and change only the hours:
| Billable hours a week | Hours a year (48 weeks) | Break-even rate | Rate at 10% margin |
|---|---|---|---|
| 40 (what people assume) | 1,920 | $45.83 | $50.93 |
| 30 | 1,440 | $61.11 | $67.90 |
| 25 (realistic for solo) | 1,200 | $73.33 | $81.48 |
| 20 | 960 | $91.67 | $101.85 |
The person pricing at 40 hours and billing 25 is charging $50.93 when the business needs $81.48. That is a 37% shortfall, applied to every hour, all year. It is the single most expensive assumption in the trade and it comes from an honest place: 40 hours is what a job used to mean.
Where the missing 15 hours go, in rough order: driving between jobs and to suppliers, quoting work you do not win, quoting work you do win, phone calls, invoicing and chasing payment, tool maintenance, dump runs, and the twenty minutes at the start of every day that evaporate. A data outfit tracking about 2,200 service businesses found labor estimating runs 12% over on average, which is the same problem measured from the other end.
You do not have to guess. Track two weeks. Write down start and stop for anything a customer is paying for, add it up, divide by two. Most people find a number between 20 and 30 and are surprised it is that low.
What actually belongs in overhead?
Overhead is every cost that shows up whether or not you worked. Run down this list and put a real monthly figure against each one. Most solo trades land between $1,000 and $2,500 a month once they stop guessing.
- Vehicle: payment or depreciation, fuel, insurance, tires, maintenance, registration. For most trades this is the biggest line by itself.
- Insurance: general liability, and a bond if your state or your customers require one. If you have employees, workers comp goes in the employee calculation instead.
- Tools: not just purchases. Set aside a monthly figure for replacement, because tools die and they die at the worst time.
- Phone and software: the phone bill, and whatever you pay monthly for invoicing, scheduling, or bookkeeping. Add it up before you look, then look. Subscriptions accumulate quietly.
- Licenses, permits, continuing education, association dues. Annual costs divided by twelve.
- Accounting: your bookkeeper, your tax preparer, and the hour a month you spend on it that could have been billable.
- Marketing: lead platforms, ads, truck lettering, yard signs, the website. If you buy leads, the lead cost calculator converts what you pay per lead into what you pay per booked job, which is the figure that belongs here.
- Rent and storage if you have a shop, a yard, or a unit.
- Bad debt. Unpleasant but real. Across all US small businesses, roughly 5% of invoice value is eventually written off, and 43% of B2B invoice value is overdue at any moment. If you never account for it, it comes out of profit.
What does not belong in overhead: materials for a specific job, subcontractors on a specific job, and your own wages. Those are direct costs and salary, and they are already handled in Steps 1 and 3.
What is a normal shop rate, and why does it look so high?
Roughly $75 to $150 an hour is normal for licensed trades in 2026, higher in big metros and for specialty work. Customers see one person and one truck and hear "$90 an hour?!" What they do not see is that of that $90, something like a third is wages, a third is overhead and unbilled time, and the rest is taxes and profit. The person they are paying for six hours spent two more driving, quoting and doing paperwork that nobody invoiced.
Which is why a contractor charging $40 an hour is not cheaper. He is either skipping insurance, running a truck he cannot afford to replace, or slowly going out of business — and then his customers get to find out what happens to a warranty when the shop closes.
There is a version of this argument you can use on a customer without sounding defensive: you are not paying $90 for an hour, you are paying $540 for the job, and that price includes the guy showing up with the right part on the truck, being insured while he is in your house, and answering the phone in March if it leaks. Quote the total. Nobody argues with a total the way they argue with an hourly rate.
Rate ranges are typical published 2026 figures for US skilled trades and vary by market, license and specialty. Verify against two or three real local quotes before you rely on them. Estimates for planning, not tax or legal advice.
Common questions
How do I calculate my hourly rate as a contractor?
Add the salary you want to a full year of business overhead, divide by your real billable hours for the year, then divide by one minus your profit margin. Worked out: ($70,000 salary + $18,000 overhead) ÷ 1,200 billable hours = $73.33 break-even, and $73.33 ÷ 0.90 = $81.48 an hour with a 10% margin.
What is the difference between markup and margin?
Markup is measured against your cost. Margin is measured against your price. A 30% markup is only a 23.1% margin, because 30% of a $7,692 cost is $2,308 of profit on a $10,000 price. To actually keep 30% of the price you need a 42.9% markup. Quoting markup and calling it margin is the most common pricing mistake in the trades.
How much money does confusing markup with margin actually cost?
On a $10,000 job, a 30% markup leaves you $2,307.69. A true 30% margin on that same $10,000 price is $3,000. You are $692.31 short on that one job. A contractor on r/Contractor in June 2026 put it this way: "A 30% markup is only a 23% margin. On a $10k job that's $700 you're leaving on the table. Every. Single. Job."
Why should I only count 25 billable hours a week, not 40?
Drive time, quotes, supply runs, callbacks, invoicing and chasing money eat 10 to 20 hours of every week, and nobody pays you for those. Most solo trades honestly bill 20 to 30 hours a week. Price against 40 and every unbilled hour comes straight out of your own pay.
What is a normal hourly rate for skilled trades?
Roughly $75 to $150 an hour is normal for plumbers, electricians, HVAC techs and similar licensed trades in 2026, with big metros and specialty work higher. That is not take-home pay. It also has to cover the truck, insurance, tools, self-employment tax, and every hour of the week nobody pays for.
Why is my rate so much higher than my old paycheck?
An employer used to carry your overhead: the vehicle, the insurance, the tools, the software, the payroll taxes, the idle time. Now you do. A $30 an hour paycheck turns into a $75 to $100 an hour rate once one person's rate has to carry a whole business and only about 25 hours a week are billable.
Should I mark up materials, and by how much?
Yes. A 10% to 30% materials markup is standard and 20% is a common default. The markup pays you for sourcing, driving, hauling, warrantying, and fronting the money. Selling materials at cost means doing all of that for free, and it means a bad batch of fixtures comes out of your pocket.
How many jobs a month do I need to break even?
Divide your monthly nut — salary draw plus overhead — by the money left over on an average job after materials and subs. With a $70,000 salary and $1,500 a month of overhead, the nut is $7,333 a month. On a $1,450 average ticket with $800 of materials, you keep $650 a job, so you need 12 jobs a month to break even and 13 to also keep a 10% profit.
Does this calculator save or send my numbers anywhere?
Only if you tick the save box, and then only into this browser on this device. Nothing is uploaded, there is no signup, and no analytics event ever carries a number you typed. Untick the box and the saved copy is deleted.
Is an hourly rate even the right way to quote?
Use the rate to build the number and quote a flat price. Customers argue with hours and they do not argue with a total. The rate is for you: it is how you check whether a flat price is high enough before you sign it, not what you print on the estimate.
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