Calculator · Free

Shop Rate Calculator

Determine the hourly rate you must charge to cover overhead and hit your income target.

What the business has to produce

Work backward from

Owner incomeYou are not on payroll; the rate has to pay youNet profitYour salary already sits inside overhead

Target annual owner income

$/yr

What you need to take out of the business in a year.

Annual fixed overhead

$/yr

Rent, insurance, admin pay, vehicles, software, marketing — every cost not attributable to one job.

Field labor

Billable field staff

People who turn wrenches. Office staff belong in overhead.

Paid hours per person per year

hrs

2,080 is a full year at 40 hours. Subtract nothing here — utilization handles it.

Average field wage

$/hr

Payroll burden38%

Employer taxes, workers' comp, liability, benefits, vehicle and phone.

Billable utilization65%

Share of paid hours you actually invoice. Drive time, shop time, training and callbacks all come out of this.

Other contribution

Annual material margin

$/yr

Optional. Gross profit earned on parts markup, which reduces what labor has to carry.

Required billing rate

$121.93per billable hour

4,056 billable hours a year have to carry $494,558 of cost and target.

Billable hours available6,240 paid hours at 65% utilization: 4,056 hrs
Burdened labor cost$44.16/hr across every paid hour, billable or not: $275,558
Fixed overhead: $148,000
Owner income target: $95,000
Less material marginParts profit that labor no longer has to cover: −$24,000
Cost per billable hourBreak-even before any profit: $98.51/hr

What utilization does to your rate
Utilization	Billable hours	Required rate	Change vs. today
50%	3,120	$158.51/hr	+$36.58
55%	3,432	$144.10/hr	+$22.17
60%	3,744	$132.09/hr	+$10.16
65%	4,056	$121.93/hr	Your input
70%	4,368	$113.22/hr	−$8.71
75%	4,680	$105.67/hr	−$16.26
80%	4,992	$99.07/hr	−$22.86
Every point of utilization		$1.85/hr	Moves the rate this much

Your required rate sits inside the normal market band

$121.93/hr is inside the $95–$225 band typical of residential service work, so the model closes. Note that moving utilization from 65% to 75% would drop the required rate to $105.67/hr without losing a single job.

You pay for every hour, not just the billable ones

At 65% utilization, 2,184 paid hours a year — $96,445 of burdened wage — never appear on an invoice. That cost is already inside the rate above. It is also why route density and dispatching beat a price increase: they cost nothing and they move the same lever.

What this assumes

Billable utilization is the share of paid hours actually invoiced to customers.
Overhead includes every cost not directly attributable to a specific job.
Payroll burden covers employer taxes, workers' compensation, liability insurance and benefits.

Understanding the result

Your rate is arithmetic, not a market survey

Competitors' rates tell you what the market tolerates, not what your business needs. Start from the number your costs require, then decide whether you can win work at that price. If you cannot, the problem is your cost structure or your positioning — not your rate.

Utilization is the hidden lever

Moving from 55% to 70% billable utilization has a larger effect on profitability than a 10% rate increase, and it does not cost you a single job. Route density, better dispatching and reducing callbacks all convert directly into margin.

You may also need

The next decision usually follows directly from this one.

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Where to go next

All business and pricing toolsPrice work, measure margin and find your break-even.