What to Charge an Hour to Make $50,000 a Year
Charge at least
$71.10 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 year50000 $
- 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$71.10 per hour
| Hours worked a year | 1,920 |
|---|---|
| Billable hours at 70% | 1,344 |
| Pay plus overhead to cover | $86,000.00 |
| Break even rate | $63.99 /hrat this rate you make zero profit |
| With 10% profit margin | $71.10 /hr |
| Day rate, 8 hours | $568.78 |
| Revenue this implies | $95,555.56 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% | $99.54 per hour | 960 |
| 60% | $82.95 per hour | 1,152 |
| 70% | $71.10 per hour | 1,344 |
| 80% | $62.21 per hour | 1,536 |
| 90% | $55.30 per hour | 1,728 |
What else matters here
Fifty thousand of pay and $36,000 of overhead is $86,000 over 1,344 billable hours. Break even is $63.99 an hour, the rate with profit is $71.10, and the revenue that implies is $95,556.
That is a full time number. It assumes 48 weeks at 40 hours, and if this is side work in the evenings and at weekends, every figure on the page changes in the direction people do not expect.
Run it at 20 hours a week and the billable total falls to 672, but the overhead does not halve: the truck, the insurance and the phone cost the same whether you work 20 hours or 40. The rate needed goes to $142.20. Part time work is not a cheaper version of the same business, it is the same fixed costs spread over half the hours, which is exactly why undercutting full time contractors on a side job usually loses money.
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 $50,000 a year?
$71.10 an hour at 1,344 billable hours a year, with $36,000 of overhead and 10 percent profit. Break even is $63.99.
What should I charge for part time or side work?
More per hour, not less. At 20 hours a week the same $50,000 of pay needs $142.20 an hour, because overhead is a fixed cost spread across half as many billable hours.
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.