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Hourly rate calculator for contractors
Work out the hourly rate that pays you what you want to take home, after business costs, taxes and the hours nobody pays you for. Change any number and the rate updates. Free, no sign-up, on your phone or your computer.
Work out your rate
Start with the pay you want to take home for the year, then be honest about the rest. The hint under each box says what belongs in it.
How the calculator works
It works backwards from the money you want to keep, in four steps. Every step is on the page, so you can check it with a pencil.
- Profit before taxes = the pay you want ÷ (1 − the share you set aside for taxes). Keep $60,000 with 25% set aside and the business has to make $80,000 of profit.
- What the work has to bring in = that profit + your business costs for the year.
- Hours you can bill = weeks you work × hours a week × the share of those hours a customer pays for.
- Your hourly rate = what the work has to bring in ÷ the hours you can bill.
The example, worked through
The numbers already in the boxes are an example, not advice: $60,000 to take home, $15,000 of costs, 25% set aside for taxes, 48 weeks of 45 hours, and 65% of those hours billed.
Profit before taxes is $60,000 ÷ 0.75 = $80,000. Add the $15,000 of costs and the work has to bring in $95,000. The billable hours are 48 × 45 × 0.65 = 1,404. So the rate is $95,000 ÷ 1,404 = $67.66 an hour, and most people round that up to $68 or $70.
Look at what moved it. Billing 75% of the hours instead of 65% drops the rate to about $58.64. Taking four more weeks off raises it to about $73.82. The rate is mostly a question of hours, not of pay.
The number most people get wrong: billable hours
A 45-hour week is not 45 hours a customer pays for. Driving between jobs, picking up parts, quoting work you don't win, callbacks, and the invoicing at night are all work, and none of it is on the bill unless you charge for it.
Nobody publishes a reliable figure for this, so the 65% in the box is a starting guess, not a statistic. The way to find your own is to track one normal month: every hour you work, and which ones ended up on an invoice. Put that share in the last box.
Two of those hours can go back on the bill. Travel time is one: charge it by time, and the calculator shows what 20 minutes of travel is worth at your rate. A minimum charge for short visits is the other; our guide to the service call fee shows how to set one.
Taxes: what to set aside
When you work for yourself, nobody holds tax back from your pay. The IRS puts the self-employment tax rate at 15.3%, which pays for Social Security and Medicare. It applies once your net earnings from self-employment reach $400 for the year, and it comes on top of income tax.
The IRS also says a self-employed person may have to pay estimated taxes quarterly, so the money has to be put aside as you earn it, not found in April. The 25% in the box is a common starting point, not a rule. Your real share depends on your state, your deductions and your household, so ask an accountant once and use their number.
What employees in your trade earn
Not sure what take-home to aim for? The Bureau of Labor Statistics publishes what employees in each trade earn. It is a fair floor for the pay box: working for yourself should pay at least what the same work pays on someone else's payroll.
For your own state, and the range from the lowest-paid tenth to the best-paid tenth, see what tradespeople earn, by trade and state.
To turn a rate into prices for your trade's common jobs, with the parts and your markup, use the price book builder: it starts from your state's wage through this calculator's math.
| Median pay | |
|---|---|
| Plumbers, pipefitters and steamfitters | $30.67 an hour |
| Electricians | $30.38 an hour |
| HVAC mechanics and installers | $29.33 an hour |
| Drywall installers, ceiling tile installers and tapers | $28.74 an hour |
| General maintenance and repair workers | $23.84 an hour |
| Painters, construction and maintenance | $23.75 an hour |
| Landscaping and groundskeeping workers | $18.82 an hour |
| Janitors and building cleaners | $17.71 an hour |
U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, May 2025 wages. These figures leave out self-employed workers. They are what an employer pays a worker, not what a customer pays a business, so your rate will sit well above them.
Pricing guides for each trade
An hourly rate is one way to price. Every trade guide is listed under Pricing guides on our guides page: the method that trade uses, published prices with their sources, and a worked example. Start with how to price a job, and use the markup and margin calculator for the parts you buy.
From your rate to a price on every job
A rate on a sticky note still has to be typed into every quote. In Workeey you put it in once: your hourly rate, travel per 20 minutes, a call-out charge (the least any job costs), the first hour, extra for evenings and weekends, your parts markup and the deposit you ask for. Then a quick estimate prices each job from those numbers, and one tap turns the estimate into the invoice.
The free plan includes 23 quick estimates a month and unlimited invoices, with no card. See pricing for what the paid plans add.
How do I calculate my hourly rate as a contractor?
Add the profit you need before taxes to your yearly business costs, then divide by the hours a customer actually pays for. Profit before taxes is the pay you want to keep ÷ (1 − your tax share). With $60,000 to keep, 25% for taxes, $15,000 of costs and 1,404 billable hours, that is $95,000 ÷ 1,404 = $67.66 an hour.
Why is my rate so much higher than an employee's wage?
Because you pay for everything an employer would: the van, insurance, tools, both halves of Social Security and Medicare, and the hours spent driving, quoting and invoicing. An employee is paid for all 40 hours. You are only paid for the share you bill.
How much should I set aside for taxes when I'm self-employed?
The IRS self-employment tax rate is 15.3%, and income tax comes on top of it. Many people start by setting aside 25% to 30% of their profit, but your real share depends on your state and deductions, so ask an accountant once. The IRS says you may have to pay estimated taxes quarterly.
Should I charge for travel time?
If you don't, it comes out of your rate. Charge it by time; this calculator shows what 20 minutes of travel is worth at your rate. For short visits, a minimum charge covers the trip. See our guide to the service call fee.
Does this calculator work on a computer?
Yes. It works the same on a phone, a tablet or a computer, with no sign-up. Workeey itself runs on your phone.