How to Set Your Hourly Rate

A 40-hour week is not 40 billable hours. Estimates, driving, supply runs, invoicing and callbacks eat a big share of it. Many one-person shops bill closer to 25 hours a week. Write down your honest number — everything else depends on it.

Total your yearly overhead:

• Truck payment, fuel, insurance, maintenance
• Liability insurance and bonding
• Licenses, permits, dues
• Tools, replacements, consumables
• Phone, software, accounting
• Health insurance and self-employment tax

Rate = (Pay you want + Yearly overhead + Profit) ÷ Billable hours Example: Take-home target $70,000 Overhead $24,000 Profit (10%) $ 9,400 -------- Total needed $103,400 Billable hours (25/wk × 46 wks) = 1,150 $103,400 ÷ 1,150 = $90/hr

Those figures are placeholders — swap in your own. The point is that your rate is an output of your costs, not a number you pick to sound competitive.

A two-hour minimum (or a flat trip charge) protects you from twenty-minute jobs that cost an hour of driving. State it up front, before you get in the truck, and nobody argues about it later.

You paid for the supply run, the receipt, and the warranty risk. A markup on materials is standard practice — pick a percentage, apply it consistently, and list materials as their own line on the invoice so the total never looks arbitrary.

• Hourly — unknown scope, repairs, troubleshooting, old houses.
• Flat — jobs you've done a hundred times. Customers prefer a number, and you keep the upside when you work fast.

Either way, put the rate, the minimum, and the materials markup in writing before the work starts. See our payment terms guide for the exact wording.

Hi Dave — heads up that starting October 1 my rate goes to $90/hr. Costs have gone up across the board and I'd rather tell you straight than cut corners. Anything already quoted stays at the old price.