What to Charge an Hour to Make $200,000 a Year
Charge at least
$195.11 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 year200000 $
- 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$195.11 per hour
| Hours worked a year | 1,920 |
|---|---|
| Billable hours at 70% | 1,344 |
| Pay plus overhead to cover | $236,000.00 |
| Break even rate | $175.60 /hrat this rate you make zero profit |
| With 10% profit margin | $195.11 /hr |
| Day rate, 8 hours | $1,560.85 |
| Revenue this implies | $262,222.22 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% | $273.15 per hour | 960 |
| 60% | $227.62 per hour | 1,152 |
| 70% | $195.11 per hour | 1,344 |
| 80% | $170.72 per hour | 1,536 |
| 90% | $151.75 per hour | 1,728 |
What else matters here
Two hundred thousand of pay plus $36,000 of overhead is $236,000 across 1,344 billable hours, which breaks even at $175.60 and prices at $195.11 an hour, $1,560.85 a day and $262,222 of revenue.
At close to two hundred dollars an hour, almost nobody is still buying hours. They are buying an outcome, and the price of an outcome comes from what it is worth to the person paying rather than from how long it takes the person doing it.
That does not make this page useless, it makes it the floor check. Work out the price from the value, then divide it by the hours the job will really take and see whether the result clears $195.11. If it does, the hourly number never needs to appear on the quote. If it does not, you have found a job to decline rather than a rate to defend, and the fastest way to get better at this is to stop showing hours on quotes at all so the conversation is about the result instead.
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 $200,000 a year?
$195.11 an hour at 1,344 billable hours a year, with $36,000 of overhead and 10 percent profit. Break even is $175.60.
Should I quote by the hour at this level?
No. Price the outcome, then divide by the hours it will really take and check the result clears $195.11. The hourly figure is a floor to test a price against, not a number to put on the quote.
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.