Hourly Rate Calculator
Use this hourly rate calculator to work out a realistic hourly charge rate based on income goals, overhead, and billable hours.
What This Calculator Does
This calculator helps you convert your income target and business overhead into an hourly rate. It is useful when you need to set a minimum charge-out rate that actually supports the business.
How to Use
- Enter your target annual income.
- Enter annual overhead.
- Enter billable hours per year.
- Click calculate to get a recommended hourly rate.
Example
If you want $120,000 income, your overhead is $40,000, and you expect 1,600 billable hours, the calculator shows the hourly rate needed to cover both.
Why This Calculation Matters
Many tradies undercharge because they only think about wages, not downtime, admin, vehicles, or quoting time. A realistic hourly rate stops the business from bleeding money.
Common Mistakes
- Assuming every working hour is billable.
- Leaving out admin and travel time.
- Ignoring overhead like insurance, software, and vehicles.
- Using competitor prices without checking your own numbers.
FAQs
Why are billable hours lower than working hours?
Because admin, quoting, travel, ordering, and downtime all reduce the hours you can actually charge to jobs.
Should my hourly rate include profit?
Yes. Your charge-out rate should cover costs and still leave room for profit.
How often should I review my hourly rate?
At least every few months, and any time your costs change meaningfully.