What to Charge an Hour to Make $110,000 a Year
Charge at least
$120.70 per hour
48 weeks, 40 hours a week, 70% of them billable, $36,000 of annual overhead and 10% profit.
How that number is worked out
These are the figures this page was built with and every line the calculator produces from them. Change anything above and all of it moves.
- What you want to earn a year110000 $
- Annual overhead: truck, insurance, phone, office, software36000 $
- Weeks you actually work48
- Hours a week on the tools40
- Percent of those hours you can bill70 %
- Profit on top, as a margin10 %
Charge at least$120.70 per hour
| Hours worked a year | 1,920 |
|---|---|
| Billable hours at 70% | 1,344 |
| Pay plus overhead to cover | $146,000.00 |
| Break even rate | $108.63 /hrat this rate you make zero profit |
| With 10% profit margin | $120.70 /hr |
| Day rate, 8 hours | $965.61 |
| Revenue this implies | $162,222.22 a year |
Billable share of the week compared
Billable percent is the whole game. Nothing else on this page moves the rate as far.
| Billable share of the week | Charge at least | Billable hours at 70% |
|---|---|---|
| 50% | $168.98 per hour | 960 |
| 60% | $140.82 per hour | 1,152 |
| 70% | $120.70 per hour | 1,344 |
| 80% | $105.61 per hour | 1,536 |
| 90% | $93.88 per hour | 1,728 |
What else matters here
A hundred and ten thousand of pay plus $36,000 of overhead is $146,000 over 1,344 billable hours. Break even is $108.63 and the rate is $120.70, which is $965.61 a day and $162,222 of revenue.
Most contractors who arrive at a number like this are not setting a rate for the first time, they are working out how far theirs has fallen behind. The useful way to see it is in pay rather than in percent: moving from $120.70 to $128.97, which is under seven percent, is the difference between this page and the $120,000 one. Seven percent to the customer is ten thousand dollars of pay to you.
Raise it a little every year and nobody leaves. Let it sit for four years and the correction you eventually need is the one that costs customers, because a single twenty five percent rise reads as opportunism no matter how justified it is. Give existing customers notice in writing, apply it to new quotes first, and never apologize for it in the same sentence.
What this calculator assumes
- Billable percent is the whole game. Estimating, driving, buying material, chasing payment and answering the phone are all real hours that no customer pays for. 70 percent is optimistic for a one man operation.
- Profit is separate from your pay. Your pay is a cost of the business. Profit is what the business earns for carrying the risk, and it is what funds the next truck.
Questions people ask
What hourly rate do I need to make $110,000 a year?
$120.70 an hour at 1,344 billable hours a year, with $36,000 of overhead and 10 percent profit. Break even is $108.63.
How often should I raise my hourly rate?
Once a year, by a small amount, with notice in writing and new quotes first. Under seven percent here is $10,000 of pay, and a yearly rise nobody argues with beats the twenty five percent correction you need after leaving it four years.
Is my pay the same thing as profit?
No, and mixing them is the most common reason a busy contractor has no money. Your pay is a cost of the business, the same as a wage you would pay somebody else. Profit is what the business earns for carrying the risk, and it is what buys the next truck.
The hourly rate calculator takes any dimensions you like and hands back the same list.