By the TradeCrew team · September 7, 2026 · 9 min read

What to Charge Per Hour as a Contractor

Most tradespeople set their hourly rate once, in the first month of going out on their own, under pressure, on a phone call. Someone asks what you charge, you name a number that sounds defensible, and three years later you are still charging it.

Search for help and every calculator gives you the same formula: take the income you want, add overhead, divide by 2,080 hours. That formula was written for someone who sits at a desk and bills a client for the whole day. It does not describe a week with a van in it.

Here is the version that does — how to work out the number, why the standard math undercharges you, and how to check afterwards whether the rate actually held.

The number every calculator gets wrong

The mistake is not in what you want to earn. It is in the denominator.

A 45-hour week for a one-person trade business is not 45 hours of billable work. It contains driving between jobs and back to the supply house. Quoting — including the quotes you do not win. Ordering material and waiting on it. Writing invoices and chasing the ones that go quiet. Insurance renewals, licensing, continuing education. Warranty callbacks you are not billing for. Loading and unloading the van.

None of that is billable. All of it is your week.

If you bill 25 hours out of a 45-hour week but you set your rate as though you bill 40, you are roughly 37% short before you have bought a single fitting. That gap does not show up as a bad month. It shows up as being busy all year and having nothing at the end of it.

Step 1: Add up what the business has to cover

Start with a year, not an hour. Write down everything the business has to pay for before you are even, including yourself:

• What you need to take home — the actual money that has to land in your account.
• Tax — income tax and self-employment tax, set aside as you go rather than found in April.
• Insurance — liability, tools, vehicle, and health cover you now buy yourself.
• Vehicle — payment or depreciation, fuel, maintenance, tires.
• Tools — replacements, batteries, blades, bits, calibration, the one big purchase a year.
• Running costs — phone, software, licensing, bonding, continuing education, the accountant.
• Unpaid time — vacation, sick days, and the slow stretch every trade has.
• Profit — separate from your wage. Your wage pays you. Profit pays for the next van.

That last one is the line most people leave out. If the business only ever covers your wage, it has no way to buy anything, absorb a bad month, or ever be worth selling.

Step 2: Count the hours you can actually bill

Do not estimate this. Estimating it is how you end up back at 40. Measure it for two weeks: write down every hour you work and mark each one billable or not. Two weeks is enough to see the shape of it, and short enough that you will finish.

Expect these to be the categories doing the damage:

• Drive time — between jobs, to the supply house, to the dump.
• Quoting — site visits, take-offs, and writing it up. Count the ones you lose too, because they cost the same to produce.
• Supply runs — including the second one, for the part you did not know you needed.
• Admin — invoicing, follow-up, bookkeeping, permits.
• Callbacks — warranty work and the small fixes you do not charge for.

Then take it out to a year. Subtract vacation, sick days, holidays, and the weeks where the phone is quiet. Whatever is left is the number you divide by — and it will be a lot further from 2,080 than you expect.

Step 3: Do the division

Rate equals annual costs divided by annual billable hours. That is the whole calculation. Here it is with illustrative numbers — use your own:

• Everything the business has to cover in a year, from Step 1: $120,000
• Hours you can actually bill in a year, from Step 2: 1,100
• Hourly rate: 120,000 ÷ 1,100 = $109

Run the same business through the standard calculator, dividing by 2,080, and it tells you to charge $58. Same costs, same person, same year. One of those numbers keeps the business alive and the other one closes it slowly enough that you blame the market.

Step 4: Check it against your market

Now hold your number up against what work actually goes for where you are. Call two competitors and ask their call-out rate. Read the local job ads. Ask the supply house counter staff who is busy.

If your number lands well above the market, the answer is usually on the cost side or in what you sell, not in quietly dropping the rate. If it lands well below, you have just found money.

One thing not to do: price low on purpose because you are new. A rate well under the going one does not read as good value, it reads as inexperience, and it brings you the customers who haggle hardest. Raising it later means losing exactly the people you won with it.

Step 5: Remember the rate is an input, not a quote

Your hourly rate is how you build a price. It is not the price. Customers are buying a finished job, and they want a total they can say yes to — not a meter running.

Use the rate to work out labor, add materials and everything else the job costs, then present a number for the job. That is a different skill, and it is covered in how to quote contractor jobs.

A few things the hourly rate cannot quietly absorb, and which belong on the quote as their own line so the customer can see what they are paying for:

• A minimum charge for short calls, so a 20-minute job still pays for the trip.
• A trip charge when the job is far enough out that drive time stops being background cost.
• Disposal — the dump run, the container, the fee.

Step 6: Then find out whether the rate held

Everything above produces a hypothesis. The rate is right if the jobs you quote at it come in at the hours you assumed. The only way to know is to compare the two, job by job.

That means logging hours as you work them, not reconstructing them on Sunday night. Memory is not neutral — it always rounds in favor of the quote.

This is what TradeCrew is for on this particular problem:

• Set your rate once. Your hourly rate lives on your profile in Settings, so it is not a number you retype from memory on every job.
• Log time against the job. Each entry is a description, the minutes, the rate, and the date. The rate sits on the entry, not the job, so a weekend callout or an hour of a different kind of work can be logged at its own number.
• Push the hours into the quote. Applying tracked time adds one Tracked Labor line — quantity is your total hours, the unit is hours, and the rate is the average of what you logged. Log more time and apply it again and that same line updates rather than stacking up duplicates.

Do that for ten jobs and the gap between the hours you quoted and the hours you logged is your real answer — both about the rate and about how you estimate. The follow-through is in how to track job costs as a solo contractor.

What this rate is not

• Not the price of every hour. Plenty of work is better sold at a fixed price for the job.
• Not permanent. Revisit it once a year, and any time your insurance, vehicle, or health cover changes.
• Not a secret to defend. Most customers do not care what your hourly rate is. They care what the job costs and when you can start.

Common mistakes

• Dividing by 2,080. The single most expensive assumption in the whole calculation.
• Setting the rate from your old wage. Your employer was covering tax, insurance, vehicle, tools, and downtime on top of what showed on your check. Matching that hourly figure is a large pay cut.
• Leaving profit out. A business that only covers your wage cannot replace anything that breaks.
• Never raising it. Costs go up every year. A rate held flat for four years is a pay cut you gave yourself in installments.
• Quoting a rate before seeing the job. The rate is not the answer to what will this cost, and answering it on the phone anchors you to a number you have not thought about.

The bottom line

The rate is not a confidence problem or a market problem. It is arithmetic, and the arithmetic goes wrong in one place: the hours you assume you can bill.

Add up what the year has to cover. Measure two weeks honestly to find out what you really bill. Divide. Then track the jobs and let them tell you whether you got it right.