Contractor Hourly Rate Calculator: The Rate Your Income Goal Requires
The hourly rate you need is your take-home goal plus a year of business expenses, divided by the hours you can actually bill: (goal + expenses) ÷ (billable hours per week × weeks worked). With the prefilled inputs that is ($75,000 + $25,000) ÷ (30 × 48 hours) = $69.44 an hour. Enter your own four numbers; the method, a worked example and a billable-hours table follow.
This works backward from income to rate. To go the other way, from jobs and prices to what you will take home, use the salary calculator. To price one job at a margin, use the profit calculator.
Your Income Goals
What you want to pay yourself after all expenses
Insurance, vehicle, tools, marketing, software, taxes
Hours actually spent on paying work (not admin, travel, quoting)
Subtract vacation, sick days, and seasonal slowdowns
Your Recommended Rate
How the calculator gets the rate
Five lines. The rate is a division, so the denominator (billable hours) matters as much as the goal.
- 1.
Revenue the business needs
take-home goal + annual business expenses
- 2.
Hours you can bill
billable hours per week × weeks worked
- 3.
Hourly rate (the headline number)
revenue needed ÷ billable hours
- 4.
Daily rate
hourly rate × (billable hours per week ÷ 5)
- 5.
Expense ratio
annual expenses ÷ revenue needed
The rate label in the results (Below Market, Competitive, Strong, Premium) is a fixed cut at $35, $65 and $100 an hour. It is not a market survey; this page quotes no national billing rate because we could not verify one. The only external figures here are BLS employee wages, which are a floor, not a rate.
Worked example: a handyman who wants $65,000
Illustrative inputs, not a customer’s figures and not recommended amounts. The goal is pre-tax take-home; the expense list is the kind of annual budget a one-truck business carries.
Annual expenses in the example
- Truck payment, insurance, registration
- $6,000
- Fuel and maintenance
- $3,600
- General liability insurance
- $2,400
- Tool replacement and consumables
- $2,000
- Phone, software, website
- $1,500
- Advertising and lead fees
- $2,500
- Licensing, bookkeeping, bank and card fees
- $4,000
- Total
- $22,000
The rate
- Revenue needed
- $65,000 + $22,000 = $87,000
- Billable hours
- 28 × 48 = 1,344
- Hourly rate
- $87,000 ÷ 1,344 = $64.73, call it $65
- Daily rate
- $64.73 × (28 ÷ 5) = $362
- Expense ratio
- 25.3%
The vehicle lines are the ones most people underestimate. If you track by mileage instead of receipts, the IRS business standard mileage rate is 72.5 cents a mile for January 1 to June 30, 2026 and 76 cents from July 1, 2026 (IRS standard mileage rates, checked October 7, 2026). At 12,000 business miles a year, 76 cents is $9,120, in line with the $9,600 the example carries for truck, fuel and maintenance.
What billable hours do to the rate
The same $87,000 of revenue needed, over 48 weeks, at different billable hours per week. Every hour you cannot bill is paid for by the hours you can.
| Billable hours a week | Billable hours a year | Rate needed |
|---|---|---|
| 20 | 960 | $90.63 |
| 25 | 1,200 | $72.50 |
| 28 (the example) | 1,344 | $64.73 |
| 30 | 1,440 | $60.42 |
| 35 | 1,680 | $51.79 |
Ten fewer billable hours a week, 30 down to 20, raises the rate you need by half. That is why the input to measure, rather than estimate, is billable hours. If the measured number is low, the fix is usually shorter drives and fewer unpaid estimate trips, not a higher rate the market will not pay; the break-even calculator shows the floor on any single job and the service pricing calculator turns this rate into a service-call price.
A rate is not a wage
The public figures that exist are employee wages. They show the floor a billing rate has to clear, not what to charge.
- $23.84 an hour: median wage for general maintenance and repair workers, May 2025 (BLS Occupational Outlook Handbook).
- $22.44 an hour: median wage for construction laborers and helpers, May 2025 (BLS Occupational Outlook Handbook).
- $46.89 an hour: what a private-industry employer paid for an hour of work in June 2026, $32.82 in wages plus $14.07 in benefits, with benefits at 30.0% of the total (BLS Employer Costs for Employee Compensation, released September 9, 2026).
The example rate of $65 is 2.7 times the maintenance-worker median wage. The gap is not greed: it is the $22,000 of expenses, the 12 or more unbilled hours a week, and both halves of Social Security and Medicare that an employer would otherwise carry. BLS pages checked October 7, 2026; the Handbook pages were last modified August 27, 2026.
Questions about contractor hourly rates
What should a contractor charge per hour?
The rate that covers what you need to take home plus what the business costs to run, spread over the hours you can actually bill: (goal + expenses) ÷ billable hours. There is no published national billing rate for contractors on this page, because none we could verify exists; what BLS publishes are employee wages ($23.84 an hour median for general maintenance and repair workers in May 2025), and a billing rate has to sit well above a wage to pay for expenses, unbilled hours and both halves of payroll tax. The worked example lands at $65 an hour for a handyman who wants $65,000 a year with $22,000 of expenses and 28 billable hours a week.
How many hours a week can I really bill?
Fewer than you work, and the only honest number is a measured one. Time estimates, driving, picking up materials, phone calls and invoicing all come out of the week before a customer pays for an hour. Track every job start and stop for two weeks and divide billable hours by weeks; that is the number to enter. The table on this page shows why it matters: the same $87,000 needs $60 an hour at 30 billable hours and $91 at 20.
Should I quote by the hour or by the job?
Use the rate either way. Quoting by the job (a flat price) usually lands better with customers and rewards you for being fast, but the flat price is still built from hours times this rate plus materials and markup. The job cost calculator does exactly that build-up, and the markup calculator shows what the markup you add really leaves as margin.
Do taxes go in expenses or in the income goal?
In the goal, not in expenses, or you count them twice. Treat the income goal as pre-tax: self-employment tax is 15.3% on 92.35% of net earnings (IRS Topic 554) and income tax comes on top at your bracket, so a $65,000 pre-tax goal is not $65,000 in your pocket. The salary calculator walks through what comes out of a given net income.
What changes if I hire a helper?
Their cost becomes a job cost, not overhead, and it is more than their wage. Across private industry in June 2026, employers paid $14.07 an hour in benefits on top of $32.82 in wages, so benefits were 30% of total compensation; your own figure depends on your workers' comp class and what you offer. Price their hours on the profit calculator, which has a labor burden field, and keep this calculator for your own hours.
How often should I recalculate the rate?
Whenever an expense line changes by more than you would shrug at (an insurance renewal, a new truck payment, the mid-year IRS mileage rate change) and once a year regardless, with measured billable hours instead of the number you hoped for. A rate set in January on 30 billable hours is wrong by June if you are billing 24.
Measure your billable hours for two weeks
The rate is only as good as the hours you divide by. Pocket Boss has a job timer on every plan, Solo included, so each job start and stop is recorded and the billable total is a number you read instead of guess. From $19.99/month, 14-day trial.
Related: contractor salary calculator, HVAC labor rate calculator, job cost calculator, all contractor calculators.