Charging cheap does not win customers: it means working more hours to earn the same. The most widespread mistake in home services is not a marketing problem, it is an arithmetic one. Excellent tradespeople with a full diary reach the end of the month gasping because they never worked out, in cold numbers, what their hour is really worth.
This calculator does that maths for you. Adjust your figures above and watch, in real time, the hourly rate you need to charge to hit your income goal while covering every cost.
How to read the results
- Hourly rate to charge is the headline figure: what you need to invoice per hour to take home your income goal after covering overhead and applying your margin.
- Break-even rate is your absolute floor: below that number you lose money. It is not your price, it is the red line.
- Billable hours/year is the total hours you actually get paid for in the year. It is the denominator almost everyone gets wrong.
- To cover/year is the total money your business has to generate: your take-home income plus all overhead.
- Day rate (8h) translates the rate into a full working day, handy for quoting one-day or multi-day jobs.
Hours worked is not the same as billable hours
This is the heart of the problem. Picture two tradespeople who both want to take home £40,000 a year and have £14,000 of overhead: £54,000 to cover. The first divides by the 1,840 hours he works (40 a week, 46 weeks) and lands on a rate of £29/hour. The second knows that of those 40 hours he only invoices 25, because the rest goes to travel, quotes, supply runs and paperwork. He divides by 1,150 billable hours and lands on £47/hour.
Both work the same. But the first is charging 38% below what he needs, and does not notice until the year ends and the numbers do not add up. The hour you do not invoice still has to be paid for, and it can only be paid by the hours you do invoice.
The costs nobody counts
The second hole is counting only the materials on each job. The van, the public liability insurance, the tools that break, the invoicing software, the phone, the accountant, the training: all of it exists no matter which jobs you win. If you do not spread it across your billable hours, you absorb it from your own profit without noticing. The calculator forces you to enter that full annual figure, which is almost always higher than people remember.
By the hour or fixed price
Charging by the hour protects you, but a fixed price reassures the customer. They are not mutually exclusive: the healthy move is to calculate your true cost per hour with this tool and use that rate to build fixed-price quotes. Estimate the hours of the job, multiply by your rate, add materials and margin, and present a single closed number. That way the customer buys peace of mind and you do not give away hours. The conversion page explains how to present that price so it closes, and the guide on quotes that win more jobs goes into the detail.
What to do with the number
If your real rate came out higher than what you charge today, it does not mean you have to raise prices overnight. It means you now know your floor and can make decisions with data: which jobs are worth it, which to turn down, where to cut overhead or how to raise your billable hours. The operations page covers how to recover billable hours by automating paperwork and quotes. Once your numbers are clear, talk to us and we will look at them together.
Explore the rest of the free tools to size up other parts of your business.