What to Charge an Hour to Make $120,000 a Year
Charge at least
$128.97 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 year120000 $
- 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$128.97 per hour
| Hours worked a year | 1,920 |
|---|---|
| Billable hours at 70% | 1,344 |
| Pay plus overhead to cover | $156,000.00 |
| Break even rate | $116.07 /hrat this rate you make zero profit |
| With 10% profit margin | $128.97 /hr |
| Day rate, 8 hours | $1,031.75 |
| Revenue this implies | $173,333.33 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% | $180.56 per hour | 960 |
| 60% | $150.46 per hour | 1,152 |
| 70% | $128.97 per hour | 1,344 |
| 80% | $112.85 per hour | 1,536 |
| 90% | $100.31 per hour | 1,728 |
What else matters here
Pay of $120,000 with $36,000 of overhead is $156,000 across 1,344 billable hours, breaking even at $116.07 and pricing at $128.97 an hour, $1,031.75 a day and $173,333 of revenue.
Nothing on this page allows for an invoice that never gets paid, and an unpaid invoice is not the same as an empty hour. An empty hour costs you the hour. An unpaid invoice costs you the hour, the material, the fuel and the time spent chasing it, all of which were already spent.
Two percent of $173,333 is $3,467, which is about twenty seven billable hours at this rate, very close to a full week of billable work with nothing to show for it. Two percent is not a pessimistic figure in residential work. The practical answers are a deposit, progress payments on anything long, and not starting the next phase while the last one is unpaid, all of which are cheaper than raising the rate to cover losses you could have avoided.
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 $120,000 a year?
$128.97 an hour at 1,344 billable hours a year, with $36,000 of overhead and 10 percent profit. Break even is $116.07.
Should bad debt be built into my hourly rate?
Cover it with terms first. Two percent of the revenue on this page is $3,467, about twenty seven billable hours, and a deposit plus progress payments prevents more of it than a rate rise recovers.
Is 70 percent billable realistic?
For a one man operation it is optimistic. Estimating, driving, buying material, chasing payment and answering the phone are all real hours nobody pays for. Many solo contractors land between 50 and 60 percent. The comparison table on this page shows what each level does to the rate.
The hourly rate calculator takes any dimensions you like and hands back the same list.