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Calculate your optimal hourly billing rate based on costs, overhead, and profit margins. Perfect for contractors and construction professionals.
Calculator inputs
Enter measured project values. Results update only when you choose Calculate.
Method
A common mistake on T&M and service work: billing the journeyman rate that shows up on payroll. A $35-an-hour electrician with 28 percent burden, $45/hr of allocated overhead, and 70 percent billable utilization needs to be billed closer to $115 to $135 to actually clear a 15 percent net margin. The wage is what you pay; the billing rate is what the work has to recover.
Use this for service-call rates, change-order pricing, and internal labor cost when you want the math to match what the IRS, your insurance carrier, and your bank will see at year-end. The Construction Financial Management Association (CFMA) Annual Construction Industry survey shows median net margins of 2 to 4 percent for GCs and 4 to 8 percent for specialty trades — rate-setting is the lever that moves both numbers.
Use the loaded wage on the pay stub — including any guaranteed overtime, bonus accrual, or stipend you pay every week. Salaried supers should be converted to an hourly equivalent over their actual on-site hours, not 2,080.
FICA (7.65 percent), FUTA and SUTA (~1 to 6 percent depending on state), workers comp (5 to 25+ percent depending on trade and state mod), health, dental, retirement match, paid leave. Burden often lands at 25 to 45 percent for open-shop, higher with union benefits.
Strip out training, travel, shop, callbacks, sick, paid holidays, and slow days. A field tech with 70 percent utilization is roughly 1,450 billable hours — that number, not 2,080, is what overhead has to recover against.
Divide loaded cost plus overhead per hour by (1 minus target margin). A 20 percent target margin means dividing by 0.80, not multiplying by 1.20 — the difference is real money over a year.
Payroll taxes (FICA, FUTA, SUTA), workers comp, general liability allocated by hour, benefits, paid time off, supervision, vehicles, software, tools, and overhead recovery — plus a target margin. The sell rate is usually 2.5 to 4x base wage depending on trade and utilization.
Everything above the wage that you have to pay because the worker is on payroll: payroll taxes, workers comp, benefits, PTO, training. Open-shop construction trades commonly land at 25 to 45 percent burden; signatory union crews can hit 60 to 80 percent once full fringes are loaded.
A 3x multiplier is normal for service trades when you account for burden, vehicles, dispatch, and 60 to 70 percent utilization. The right test is not the multiplier, it is whether the rate clears your overhead and target margin against your actual billable hours.
At minimum once a year, and any time wages, workers comp mod, health insurance, or fleet costs change by more than a few percent. Many contractors set rates in January using prior-year actuals from the P&L.
Separate plan workflow
This calculator solves one bounded formula from the inputs shown. BuildVision AI supports reviewed plan takeoff, complete-document CSV, and editable quote lines; the estimator owns pricing and final bid approval.