What to Charge an Hour to Make $175,000 a Year
Charge at least
$174.44 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 year175000 $
- 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$174.44 per hour
| Hours worked a year | 1,920 |
|---|---|
| Billable hours at 70% | 1,344 |
| Pay plus overhead to cover | $211,000.00 |
| Break even rate | $156.99 /hrat this rate you make zero profit |
| With 10% profit margin | $174.44 /hr |
| Day rate, 8 hours | $1,395.50 |
| Revenue this implies | $234,444.44 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% | $244.21 per hour | 960 |
| 60% | $203.51 per hour | 1,152 |
| 70% | $174.44 per hour | 1,344 |
| 80% | $152.63 per hour | 1,536 |
| 90% | $135.67 per hour | 1,728 |
What else matters here
Pay of $175,000 with $36,000 of overhead is $211,000 over 1,344 billable hours. Break even is $156.99 an hour and the rate is $174.44, or $1,395.50 a day and $234,444 of revenue.
A hundred and seventy four dollars an hour is unsellable in most residential markets and unremarkable in a commercial one, and the difference is not that commercial customers are less careful with money. It is that the work itself is shaped differently: one site for months instead of six houses a week, a superintendent instead of six homeowners, and far fewer hours lost to driving and estimating.
That shows up directly in the billable share. At 85 percent billable, which a steady commercial site can support, the same $175,000 needs $143.65 an hour instead of $174.44. What comes with it is the other half of commercial work: net 60 payment terms, retainage held to closeout, certified payroll and prevailing wage on public jobs, a bond on anything large, and a contract written by somebody else's lawyer.
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 $175,000 a year?
$174.44 an hour at 1,344 billable hours a year, with $36,000 of overhead and 10 percent profit. Break even is $156.99.
Is a commercial rate different from a residential one?
The arithmetic is the same and the inputs are not. Commercial work runs a higher billable share, so at 85 percent the same $175,000 needs $143.65, but it comes with longer payment terms, retainage and more paperwork.
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.