Pricing & business / Hourly rate
Work out your hourly rate
Start from the pay you want and what the business costs to run. See the hourly and day rate that covers both.
Your rate / USD
Hourly rate to charge
Enter the pay you want or your yearly business costs.
How it works
Put in your numbers
Use your own rates, times and measurements.
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It works it out as you type.
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Send it on, or keep it with the job.
What it covers: Work back from the pay you want and your business costs to an hourly and day rate.
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How to work out your hourly rate as a tradesperson
Your hourly rate has to cover your own pay, every business cost and all the hours you cannot bill. The most reliable way to set it is to work backwards from what you need in a year. This calculator does that sum and shows your break-even rate, your hourly and day rate with profit, and the yearly sales you need.
- Decide the pay you want for the year, before personal income tax. Treat it as a wage you pay yourself, not whatever is left over.
- Add up your yearly business costs: vehicle, fuel, insurance, tools, phone, software, accounting and anything else the business pays for. Last year's records or bank statements are the best place to start.
- Work out your working weeks. Start with 52 and take off holidays, public holidays and a realistic allowance for sick days.
- Enter the hours and days you work each week, then the share of those hours you can actually charge for. Travel, quoting, admin and buying materials are usually unpaid time, so be honest here.
- Add a profit percentage on top. The calculator treats it as a share of your final rate, like a margin. This is money for the business to grow, replace equipment or ride out quiet months, separate from your own pay.
- Compare the results with what you charge now. The break-even rate covers your pay and costs with nothing left over, and your hourly and day rates add your profit on top.
Tips and common mistakes
- Do not simply divide the pay you want by every hour in the year. You will not bill every hour or every week, so that rate will leave you short.
- Keep your pay and your profit separate. Your pay covers your living costs, and profit is what the business keeps for growth and quiet months.
- Review your rate at least once a year, and whenever a big cost changes, for example a new vehicle or higher insurance.
- If your rate comes out higher than you expected, look at your chargeable share first. Cutting unpaid travel and admin time can help more than cutting your price.
Questions
How much should I charge per hour as a tradesperson?
Work it out from your own numbers rather than copying someone else. Add the pay you want to your yearly business costs, divide by the hours you can actually charge in a year, then add a profit margin. Check the result against what others charge in your area, but do not go below your break-even rate.
What is a break-even hourly rate?
It is the rate that covers your pay and your business costs with nothing left over. If you charge less, you are effectively paying to work. Your actual rate should sit above it so the business makes a profit.
How many billable hours are there in a year?
It depends on your working weeks, your hours each week and how much of that time is chargeable. Multiply working weeks by weekly hours, then by your chargeable share. For example, if a quarter of your time goes on travel and admin, only three quarters of your hours can be billed.
How do I work out my day rate?
A day rate is your hourly rate multiplied by the hours you work in a day. The calculator shows one based on the hours and days you enter for each week. Make sure a day rate still covers travel and setting up on that day.
Should my hourly rate include tax?
The pay figure in this calculator is before personal income tax, so tax on your own income comes out of that pay. Taxes you add to customer invoices, such as sales tax, are separate and are usually added on top of your price. Check the rules where you work or ask your accountant.
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