Find out if your hourly rate covers your true costs — and what you should actually be charging. Learn more
Hourly labor cost calculator
Find out if your hourly rate covers your true costs — and what you should actually be charging.
Your team
Overhead
Utilization
Profit goal
You set the rate. Workiz handles the rest — scheduling, dispatching, invoicing, and payments, all in one place.
How to set a profitable hourly rate
Setting the right labor rate is the difference between growing a business and just buying yourself a job. If you do not account for non-billable time, taxes, and overhead, your bank account will always be lower than you expect. This calculator helps you see the big picture:
- Annual salary — The take-home pay you want for yourself.
- Overhead costs — Insurance, van payments, tools, software, and rent.
- Non-billable time — The hours you spend quoting, driving, and doing paperwork (usually 25-40% of your week).
- Target profit — The extra margin the business needs to reinvest and grow.
By accounting for all of these factors, you ensure that your labor rate covers every expense while leaving room for the growth of your company.
Example: 5-tech HVAC company breakdown
Here is how a 5-technician HVAC company might calculate their hourly rate:
| Average hourly pay | $30/hr |
| Benefits + taxes (25%) | +$7.50/hr |
| Loaded pay per hour | $37.50/hr |
| Annual overhead | $80,000 |
| Billable hours/day | 5 hrs |
| Paid days off | 14 days |
| Billable hours/tech/year | 1,230 hrs |
| Overhead per billable hour | $13.01/hr |
| True cost per hour | $50.51/hr |
| Profit margin (15%) | +$8.91/hr |
| Target hourly rate | $59.42/hr |
If this company charges $50/hr instead of the $59.42 target, each tech loses $9.42 per billable hour. Across 5 techs working 1,230 hours each, that is $57,933 in missed profit per year.
Frequently asked questions
What should I include in my hourly rate?
Your hourly rate needs to cover more than just your paycheck. You must include payroll taxes, workers comp, insurance, vehicle costs, tools, software, and rent. If these costs are not baked into your rate, they come directly out of your profit.
What is the difference between billable and total hours?
Total hours are every hour you work (driving, quoting, admin). Billable hours are only the hours a customer pays for. Most techs bill 60-70% of their time. Pricing based on total hours instead of billable hours will cause you to undercharge.
How often should I raise my rates?
Review your rate at least once a year. Insurance, fuel, and material costs increase annually. A small annual increase of 3-5% keeps you ahead of rising costs.
Should I charge hourly or flat rate?
Both work. Hourly rates are simpler for time-and-material jobs, while flat rates protect your margin if you work efficiently. Many businesses calculate their internal hourly cost first, then use it to set profitable flat-rate prices.
What is a typical hourly rate for field service work?
It varies by trade and location. Typical ranges: plumbers and electricians $85-$150 per hour, HVAC technicians $75-$130 per hour. The right rate depends on your specific overhead and the costs required to keep your business running.