Free Tool
Contractor hourly rate calculator
Stop guessing your rate. Enter your salary, overhead, and the profit you want — get the hourly rate that actually keeps the lights on.
Your numbers
What you want to pay yourself.
Truck, tools, insurance, software, rent.
Profit on top of paying yourself.
~260 for a 5-day week.
Vacation, sick, admin, estimating.
Hours you can actually bill.
Recommended hourly rate
$100.43/hr
Charge this and you cover salary, overhead, and a 15% profit margin across your billable hours.
Lean (−5%)
$94.85
Target
$100.43
Healthy (+5%)
$106.71
Billable hours / year
1,230
205 days × 6 hrs
Revenue you must bill
$123,529
$105,000 cost ÷ 85%
How the hourly rate formula works
Most contractors set their rate by copying a competitor or padding their old paycheck. The honest way is to work backward from what the business actually needs:
- Total annual cost = your desired salary + annual overhead (monthly overhead × 12).
- Revenue needed = total annual cost ÷ (1 − target margin). This bakes in profit instead of hoping for it.
- Billable hours = (working days − non-billable days) × billable hours per day.
- Hourly rate = revenue needed ÷ billable hours.
Worked example
You want a $75,000 salary with $2,500/mo overhead and a 15% margin. Annual overhead is $30,000, so total cost is $105,000. Dividing by (1 − 0.15) gives $123,529 in revenue you need to bill. If you work 260 days, lose 55 to non-billable time, and bill 6 hours a day, that's 1,230 billable hours. $123,529 ÷ 1,230 ≈ $100/hr. That's your floor — anything less and you're funding your clients' projects out of pocket.
From estimate to paid
Know your rate. Now win the job.
Turn your hourly rate into branded quotes, send them in minutes, and get paid by card or ACH. ContractorsChat does quoting, invoicing, and payments in one place — free to start.
Frequently asked questions
Straight answers about how this calculator works and how contractors use it.