// FREE TOOL
Charge-out rate calculator: what to charge per hour and per day
A charge-out rate is the hourly amount a contractor bills the customer. It is not the wage of the person doing the work: it must also cover payroll taxes and benefits, business overheads, unbillable hours and profit margin. Pick your trade below, change the numbers to yours, and get your minimum hourly rate plus the matching 8-hour day rate. Free, no signup, nothing saved or sent anywhere.
// THE CALCULATOR
Work out your rate
Picking your trade prefills a starting set of overheads. They are assumptions, not benchmarks, so change every one of them to yours. The result updates as you type.
Your minimum charge-out rate
- Your day rate (8 hours on site)
- $905
- Break-even: below this you are paying to work
- $98/hr
- Revenue you need in an average working week
- $3,390
This is what your own numbers require, not what your market pays. Compare it against the last few jobs you actually invoiced: if the gap is uncomfortable, the fix is usually billable hours or overheads, not the rate.
// BELOW THE FEDERAL MINIMUM WAGE FLOOR
At this rate an hour of billed work does not even cover one worker paid the federal minimum wage of $7.25 an hour once payroll taxes and insurance are added, before a single overhead. Many states set a higher minimum than the federal one, so check yours. Something in your inputs is too low.
That is a high number. Before you take it to a customer, check your billable hours and overheads are right.
A charge-out rate is not a wage. It is the wage plus its labor burden, plus business overheads, spread over only the hours you can invoice, plus a profit margin. A working owner who bills 30 hours a week for 46 weeks sells about 1,380 hours a year, not the 2,080 a salaried job pays for, which is why a $90,000 wage needs a charge-out rate far above $45 an hour.
Every preset in this calculator is a starting assumption, not a benchmark and not a quote. Change any number to your own. The 30-hour billable default and the 25% labor burden are starting assumptions, not published statistics, so change both to your real week and your real payroll. Nothing you enter is saved or sent anywhere.
// THE FORMULA
The math, in one block
All amounts are annual. Working weeks are 52 minus your weeks off, and labor burden is the percentage you entered, whatever your payroll actually costs.
wages cost = wage + (wage x labor burden)
total cost = wages cost + overheads
billable hours = hours per week x (52 - weeks off)
break-even rate = total cost / billable hours
charge-out rate = break-even rate x (1 + margin)
day rate = charge-out rate x 8Rates are rounded up to the next whole dollar and the day rate up to the next $5, never down. Rounding a break-even figure down is telling a contractor to lose money, so this calculator does not do it.
Crew mode ("I have people on the tools") changes two lines: wages cost gains crew size x crew wage x (1 + labor burden), and billable hours are multiplied by (1 + crew size x 0.9). Employed people carry the same burden percentage you entered for yourself, which is exactly what a burden rate is for. The 0.9 is because a hired technician bills about 90% of the owner's hours while the owner estimates and supervises, and it is an editorial assumption rather than a published statistic. With the toggle off, the block above is the whole formula.
// WORKED EXAMPLES
Three rates, worked in full
The same arithmetic the calculator runs, written out so you can check every line.
Worked example 1: solo electrician on a $100,000 wage
Inputs: wage $100,000, 25% labor burden, overheads $25,000, 30 billable hours a week, 6 weeks off, 15% margin.
Wages cost = 100,000 x 1.25 = $125,000
Total cost = 125,000 + 25,000 = $150,000
Billable hours = 30 x (52 - 6) = 1,380 hrs
Break-even = 150,000 / 1,380 = $108.70 -> $109/hr
Charge-out = 108.70 x 1.15 = $125.00 -> $125/hr
Day rate = 125 x 8 = $1,000/dayRead the break-even line first. At $109 an hour this business makes nothing: it pays the wage, the payroll taxes and the overheads, and stops. Every dollar between $109 and $125 is the entire profit, and it exists only because the margin was set deliberately.
Worked example 2: solo handyman with lean overheads
Inputs: wage $75,000, 20% labor burden, overheads $15,000, 32 billable hours a week, 5 weeks off, 10% margin.
Wages cost = 75,000 x 1.20 = $90,000
Total cost = 90,000 + 15,000 = $105,000
Billable hours = 32 x (52 - 5) = 1,504 hrs
Break-even = 105,000 / 1,504 = $69.81 -> $70/hr
Charge-out = 69.81 x 1.10 = $76.80 -> $77/hr
Day rate = 77 x 8 = 616 -> $620/dayLean overheads and two extra billable hours a week move the number a long way, which is the useful lesson here. The same wage with a truck payment and a shop attached would not land near $77.
Worked example 3: plumber with one employed technician (crew mode)
Inputs: owner wage $110,000, one technician at $65,000, 28% labor burden on both, overheads $40,000, 30 owner billable hours a week, 6 weeks off, 15% margin.
Owner wages = 110,000 x 1.28 = $140,800
Employee cost = 65,000 x 1.28 = $83,200
Total cost = 140,800 + 83,200 + 40,000 = $264,000
Billable hours = 1,380 x (1 + 0.9) = 2,622 hrs
Break-even = 264,000 / 2,622 = $100.69 -> $101/hr
Charge-out = 100.69 x 1.15 = $115.79 -> $116/hr blended
Day rate = 116 x 8 = 928 -> $930/dayThe 0.9 behind the billable line is the assumption to argue with: a hired technician is assumed to bill about 90% of the owner's hours, because the owner is still estimating and supervising. Push that number down and the blended rate climbs, which is the honest way round. Hiring only lowers your rate if the new person actually bills.
// CHARGE IT, THEN WIN IT
A rate only works if the work keeps coming
Knowing your number is half the job. The other half is winning enough of the right inquiries that you never have to discount below it. That is the part we build.
More free tools: Speed-to-Lead Calculator · Missed Call Calculator · Google Review Calculator · Website Speed Check · AI Visibility Check · all tools
// SOURCES
Where the numbers come from
Two figures on this page come from outside it, and both are national and published. Employer FICA, the Social Security and Medicare share an employer pays on wages, is 7.65% and comes from the IRS. The federal minimum wage of $7.25 an hour, which drives the floor warning, comes from the US Department of Labor; many states set a higher minimum and where they do the higher one applies, so check your own state.
Everything else is either arithmetic you can reproduce from the formula above or a number you typed in. The trade presets are starting assumptions about how overheads scale with wage, not survey data, and unemployment insurance, workers' compensation and benefit costs are deliberately left to you because they vary by state and by trade. We do not publish US hourly rate benchmarks here, because we have not done that research and a made-up band is worse than none.
// COMMON QUESTIONS
Charge-out rate questions
Anything the calculator did not answer? Ask us directly and we'll give you a straight answer, no jargon, no pressure.
Get in touchWhat is a charge-out rate?
A charge-out rate is the hourly amount a contractor bills the customer. It is not the wage of the person doing the work: it also has to cover the payroll taxes and benefits that sit on top of that wage, business overheads, the hours nobody can invoice, and a profit margin.
How do I calculate my charge-out rate?
Add your labor burden percentage to the annual wage you want, add your business overheads, then divide by the hours you can actually invoice in a year, which is your weekly billable hours times your working weeks. Add a 10 to 20% profit margin on top. Multiply the hourly result by 8 for a day rate.
What is labor burden and what goes into it?
Labor burden is everything the business pays on top of the wage itself. Employer FICA, the Social Security and Medicare share the employer pays, is 7.65% of wages and is the same nationwide. On top of that come federal and state unemployment insurance, workers' compensation, and whatever you contribute toward health insurance and paid time off. Those three vary by state and by trade, sometimes by a lot, so the calculator asks you for one combined percentage instead of guessing on your behalf. If you do not know yours, your accountant or your payroll provider's reports will have it.
Why is a charge-out rate so much higher than a wage?
The wage is only one cost. On top come payroll taxes, insurance and benefits, then the truck, the tools, the licenses, the software and the accountant, then every unpaid hour spent estimating, driving and doing paperwork. Spread across roughly 1,380 billable hours a year rather than the 2,080 hours in a full-time year, those costs push the rate far above the equivalent wage.