Contractor Hourly Rate Calculator
Built for owner-operators: enter what you need to pay yourself, your business expenses and a realistic number of billable hours, and get the hourly rate that keeps the business solvent — not a guess.
Rate = (Income + Expenses) ÷ Billable hours$83,000.00 ÷ 1,152 = $72.05This is a floor, not a target: it covers your income and expenses but includes no growth, no slack for slow months, and no profit beyond your salary. Most solo contractors bill 55–70% of their hours — assuming 100% understates the rate by 30–45%.
Handyman: where the number comes from
A solo handyman wants $65,000 a year take-home before personal tax, runs lean expenses, and realistically bills part of each week.
| Input | Value |
|---|---|
| Income goal | $65,000 |
| Business expenses | $18,000 (van, insurance, tools, software) |
| Working weeks | 48 |
| Hours/week | 40 |
| Billable share | 60% |
Result: $72.05/hr minimum — before any profit or slack
It's a floor: quoting $65/hr because a competitor advertises it means working 1,277 billable hours to hit the same income — 10 more hours a month, every month.
Load this example into the calculatorThe calculation
| Revenue needed | $65,000 + $18,000 = $83,000 |
| Billable hours | 48 × 40 × 0.60 = 1,152 |
| Rate | $83,000 ÷ 1,152 = $72.05/hr |
How this calculator works
Every result comes from the formulas below — the math shown is the math used. Change any input and results update instantly in your browser; nothing is sent to a server.
- Revenue requirement:
Revenue Needed = Target Income + Business Expenses - Billable hours:
Billable Hours = Work Weeks × Hours per Week × Utilization %Utilization accounts for quoting, admin, supply runs and rework that generate no revenue. - Minimum hourly rate:
Hourly Rate = Revenue Needed ÷ Billable Hours
What the result means
The rate is a floor: the revenue per billable hour you need to hit your income goal and cover expenses. Anything below it, and you're paying for the privilege of working.
When to use it
Use it to set or re-check your solo hourly rate from what you need to earn — not from what competitors advertise.
Common mistakes
- Assuming 40 billable hours a week — quoting, admin and supply runs typically cut that to 20–25.
- Forgetting that your rate must also cover taxes, insurance and slow months.
Frequently asked questions
How do I calculate my hourly rate as a contractor?
Add your target take-home income to all business expenses for a year (including taxes you'll owe, insurance, vehicle, tools and software), then divide by the number of hours you can realistically bill — usually 60–75% of hours worked. Most new contractors overestimate billable hours and therefore underprice their rate.
How many billable hours does a solo contractor actually have?
A common planning figure is 20–25 billable hours per week for a solo operator doing field work: the rest of a 40-hour week goes to quoting, material runs, admin and travel. Assuming 40 billable hours is the fastest way to set a rate that can't cover the year.
Have employees? Their wage isn't their cost — payroll taxes and comp ride on top.
Calculate labor burden →Related tools and guides
Contractor Hourly Rate Calculator is part of RateCraft, a set of free pricing and estimating tools for contractors and service businesses. Results are calculated entirely in your browser and are estimates for planning purposes — see our disclaimer and methodology.