At a glance
- Start from
- Fully loaded labor cost, not the wage
- Then add
- Overhead per billable hour
- Then add
- Profit margin
- Divide by
- Billable hours, not hours worked
- Tools
- Labor burden calculator, break-even calculator
Prices and rules change. Verify every item with the vendor or agency before you rely on it.
Short answer: Charge an hourly rate that covers your fully loaded labor cost, your overhead spread across the hours you can bill, and a profit margin, not a number copied from a competitor. For most one-truck shops the billable hours are the surprise: a 40 hour week often bills 25, and the rate has to carry the other 15.
Updated October 12, 2026. Requirements and fees change; confirm with the agency named on this page.
There is no national right answer to this, and anyone who gives you one is guessing about your truck payment. The rate that works is built from four numbers you already have: what an hour of labor really costs you, what your overhead is, how many hours you can bill, and the profit you need to stay in business. Here is the build.
Step 1: Your loaded labor cost per hour
Take the wage and add everything that rides on it: employer payroll taxes, workers' comp (in Washington, L&I charges it per hour worked), paid time off, and any benefits. Then add the paid hours that are not billable, because the tech is paid for the drive to the supply house whether or not a customer pays for it. The labor burden calculator turns your payroll into this number. If you are the only tech, use the wage you would have to pay someone to replace you, not zero.
Step 2: Overhead per billable hour
Add up monthly overhead: insurance, the registration and bond, phone, software, advertising, fuel, the office, your own pay if you are not in the field full time. Divide by the hours you bill in a month. This is where most new contractors under-charge, because they divide by hours worked instead of hours billed.
Step 3: Count billable hours honestly
A tech on the clock 40 hours rarely bills 40. Drive time, quotes that do not close, callbacks, supply runs and paperwork all come out of it. Track two weeks of real time before you set the rate. Our guide on paid hours vs billable hours shows the gap for a plumbing shop.
Step 4: Add profit, then check it
Profit is not what is left over. It is a line you set before you quote. Add the margin you need to fund slow months, replace equipment and pay yourself for the risk. Then run the whole thing through the break-even calculator: it tells you the minimum you must bill each month to survive, and the rate falls out of it.
A worked example
Example only, not a benchmark. A tech paid $35 an hour costs $47 an hour once payroll taxes, workers' comp and paid non-billable time are added. The shop carries $6,000 a month of overhead and bills 120 hours a month, so overhead adds $50 per billed hour. Cost per billed hour is $97. At a 25% margin on price, the rate is about $129 an hour. The same shop billing only 90 hours a month needs about $150 an hour for the same result. Billable hours move the rate more than the wage does.
Should you publish an hourly rate at all?
For most service work, no. Price the task from a price book and keep the hourly rate as your internal yardstick and your written fallback for unknown scope. See flat rate vs hourly for when each one fits.
How to check your rate against reality
- Pull last month's revenue and divide by hours billed. That is your real effective rate.
- Compare it to the rate you built above. If it is lower, you are discounting somewhere, usually in unbilled time.
- Fix the leak before you raise the rate. Charging for drive time or trip fees often closes the gap without a price increase.
- Re-run the numbers each quarter and after every raise or insurance renewal.
This guide is general business education, not legal, tax or financial advice. Your numbers come from your own books.
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Common questions
What is a good hourly rate for a handyman or contractor?
The one that covers your loaded labor cost, overhead per billable hour and a profit margin. There is no safe national number: a shop that bills 90 hours a month needs a much higher rate than one billing 120, even with the same wages and overhead.
Why is my hourly rate higher than my wage?
Because the customer’s hour pays for payroll taxes, workers’ comp, insurance, the truck, software, advertising and every paid hour that is not billable. The wage is usually less than half of what an hour really costs a contracting business.
How many hours a week can a contractor bill?
Fewer than you work. Drive time, quotes, supply runs, callbacks and paperwork are paid but not billed. Track two weeks of real time before setting a rate. Many one-truck shops bill 25 to 30 hours out of a 40 hour week.
Sources
Official pages checked on 2026-10-12.