What should you charge an hour?
Put in what your people cost and what your business costs. See what an hour costs you, what each hour you bill has to carry, and what to charge for it.
Worked out in your browser. Nothing you type leaves this page.
Put in your figures, and the answer below follows them.
What to charge
Worked out for a wage of $28.00 an hour, 30% on top of it, 2,080 paid hours a year, 75% of them billed, $60,000.00 of overhead a year, 2 people who bill and a 15% profit.
Charge $79.72 an hour.
What an hour costs you
$28.00 + 30% = $36.40
What a billed hour has to carry
- The hour, and the unbilled ones it pays for $48.53 $36.40 ÷ 75% billed = $48.53
- Its share of the overhead $19.23 $60,000.00 ÷ 3,120 billed hours (2 people × 2,080 hours × 75%) = $19.23
A billed hour carries $67.76.
- What an hour costs you
- $36.40
- What to charge an hour
- $79.72
- The margin a job’s labor makes
- 54.3%
- Billed hours a year
- 3,120
In SMG Tools
In SMG Tools these are a labor rate’s two figures: a cost rate of $36.40, which job costing counts for every hour on a job, and a billable rate of $79.72. Set your target margin near 54.3%: a job that makes it on its labor has paid its share of the overhead and your profit.
What the rate leaves out
The rate is for the hours alone. Materials, subcontractors and the other costs of a job are priced on top of it, never in it, so a job's price is its hours at this rate and its materials at what you sell them for.
The overhead is spread evenly over every hour you bill. A business that sells some hours dearer than others, an emergency call or a specialist's time, can still read its average here: the hours sold below it have to be made up by the hours sold above.
Every hour, counted, in SMG Tools
A labor rate in SMG Tools holds exactly these two figures: what an hour costs you, which job costing counts for every hour your crew logs on a job, and what you bill for it, which a proposal and an invoice charge. Every job then shows what its hours really cost against what they were sold for, and every kind of work is ranked by what it made — which kinds of work make money.
Try it on your own jobs: Pro is free for 90 days, or see every free calculator.