What your service business actually has to charge per hour
Most contractors set their rate by asking what the competition charges. That's how you end up busy and broke. This works it out from the other direction: your real costs, your real billable hours, and the margin you want left over.
1 · Your field labor
Count only people who bill hours. Not you, if you mostly sell and manage.
Base pay before taxes and benefits.
Payroll tax, workers' comp, benefits, PTO. 25–35% is typical for trades; comp-heavy trades like roofing run higher.
2,080 = 40 hrs × 52 weeks, including their vacation and holidays.
2 · Billable efficiency — the number that decides everything
Drive time, shop time, warranty callbacks, quoting, waiting on parts, rain days, sick days — all paid, none billed. Almost nobody is above 75%. If you've never measured it, 60–65% is the honest starting guess.
This one input moves your required rate more than anything else on the page. Charging as if your crew bills 85% of their hours when they really bill 60% is the single most common way a profitable-looking service business loses money every month.
3 · Overhead and what you want to make
Everything not field labor or materials: rent, insurance, trucks & fuel, phones, software, advertising, office staff, accounting, licenses.
What you'd have to pay someone to do your job. Enter 0 if it's already inside overhead above.
Profit after your salary. This is what funds new trucks, slow winters and the eventual sale of the business. 8–15% is a healthy trade target.
Used by the job estimator below.
Break-even rate
—
Charge this and you make exactly $0 profit.
Rate you should charge
—
Hits your margin target.
Billable hours / year
—
Across the whole crew.
Where every billed hour goes
$ / billable hour
Share
Job price estimator
Line
Amount
What happens if your efficiency is worse than you think
Same costs, same crew — only the share of hours you actually bill changes. This is why measuring billable efficiency is worth more than any pricing advice.
Billable efficiency
Billable hrs/yr
Break-even rate
Rate to hit target
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ShopRate Price Book Builder
The calculator above gives you one number. Turning one number into prices your office can quote from — without you in the room — is the actual work. That's what this is.
Price book builder — enter your rate once, get a printable flat-rate price sheet for 12 of your services, each with labor hours, materials, markup and the quoted price already calculated.
Good / better / best quote sheet — the three-option layout that reliably raises average ticket, with the pricing logic behind each tier explained.
Price-increase letters — three tested templates (existing customers, maintenance-contract renewal, commercial accounts) for raising rates without losing the account.
Billable-hour tracking sheet — the one-week measurement that replaces your guess at efficiency with a real number.
Rate-card worksheet — separate rates for standard, after-hours, emergency and travel, all derived from the same cost base.
Instant access, no signup, no subscription. Works in any browser; everything is printable.
Secure checkout via Stripe. Access link is shown at checkout and on your receipt.
How the math works
No black box. Every number above comes from these five steps:
Burdened labor cost = wage × (1 + burden%). A $28/hr tech at 28% burden really costs $35.84 for every hour they're on the clock.
Billable hours = staff × paid hours × efficiency%. You pay for all the hours; you only get paid for these.
Cost per billable hour = (total burdened labor for all paid hours + overhead + owner salary) ÷ billable hours. The unbilled hours don't disappear — they get carried by the billed ones.
Break-even rate = cost per billable hour.
Target rate = break-even ÷ (1 − target margin%). You divide, not multiply: to keep 12% of revenue you must mark up costs by about 13.6%, not 12%.
Materials are handled separately, through markup, so they never get buried in the hourly rate. If you bury materials in your rate, every job with unusual material cost is mispriced — and the big-material jobs are the ones that hurt.
Common questions
My competitors charge way less than this. Now what?
Then either their costs are genuinely lower (owner works in the field, no shop, no real insurance), or they're pricing below cost and don't know it yet. Neither is a reason to match them. The useful move is to find out which — and if you can't compete on the number, compete on things that are cheap for you and valuable to the customer: arrival windows you actually hit, up-front pricing, cleanliness, warranty.
Should the owner's salary be in overhead or separate?
Either, as long as it's counted exactly once. Keeping it separate is more honest, because it forces you to see profit as the thing left over after you're paid properly — not as your pay.
What if I have very different crews?
Run this once per crew type. A two-person install crew and a solo service tech have different burdened costs and different efficiencies, and averaging them hides the one that's losing money.
Disclosure. This page is free and is not sponsored. It contains no affiliate links and no tracking. The $19 Price Book Builder is our own product, sold through Stripe. This calculator is a planning tool, not accounting, tax or legal advice — check the output against your own books before you change your prices.