Key takeaways
- Your rate = (take-home you want + overhead + taxes) ÷ billable hours.
- Billable hours are far fewer than hours worked — that's what most rates get wrong.
- Average market rates are a sanity check, not a target.
- If you're winning every bid, you're priced too low.
The honest answer: there's no universal number. Your hourly rate should be the take-home you want, plus your overhead, plus the taxes you'll owe — all divided by the hours you can actually bill. For a lot of solo contractors that math lands somewhere between $75 and $150 an hour all-in, but the only rate that matters is the one built from your costs.
How do I calculate my hourly rate?
Work backward from what you need to make:
(Take-home you want + overhead + taxes) ÷ billable hours = your rate.
Say you want $80,000 in your pocket, you've got $40,000 a year in overhead, and you set aside roughly 25% for self-employment tax. That's about $150,000 your jobs need to bring in. Divide that by the hours you can realistically bill, and you've got your floor — the rate below which you're going backward.
What counts as a billable hour (and why it changes everything)?
This is the part that trips up almost everyone. You might be "working" 50 hours a week, but quoting, driving, buying materials, and chasing payments aren't billable. If only 25–30 of those hours actually land on an invoice, your rate has to cover the rest. Always divide by the hours you can bill, not the hours you put in. Cut your billable hours in half and your rate has to roughly double just to stay even.
Why "what everyone else charges" is a trap
Average rates make a nice headline, but they don't pay your bills. The guy charging less might be uninsured or underwater and not know it. Use market rates as a sanity check, not a target — then set your number from your own overhead and income goal. Here's how to build that rate into a full job price.
How do I raise my rate without losing every job?
- Lead with the result and a clean, professional quote — not the hourly number.
- Offer options (good / better / best) so price isn't the only thing they're weighing.
- Watch your win rate. If you're winning every bid, you're too cheap — nudge it up until you start hearing the occasional "no."
This is exactly what JobPricer does for you: enter your overhead once and every quote shows labor, materials, overhead, and your real profit before you hit send.
Try it free →Frequently asked questions
What is the average hourly rate for a contractor?
It ranges widely by trade and region — roughly $50 to $150+ an hour. But averages are misleading: a rate that works for one contractor loses money for another. Build yours from your own overhead, income goal, and billable hours.
How many billable hours are in a work week?
Fewer than you'd think. Even working 45–50 hours, many solo contractors only bill 25–30, because the rest goes to quoting, driving, and admin. Track yours for two weeks — it's eye-opening.
Should I charge by the hour or by the job?
Most customers prefer a flat price for the job, and it rewards you for working efficiently. Quote a flat price, but build it from your hourly rate behind the scenes so you always know your margin.
CWritten by Craig, founder of JobPricer
I ran a contracting business and finished 500+ jobs before I built JobPricer. Everything here is what I wish someone had told me when I started quoting.