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Hourly Rate Calculator

Determine your optimal hourly rate to cover costs, overhead, and target profit.

Time Off

Annual Expenses

Find your breakeven and target hourly billing rate based on worker salary, overhead costs, time off, benefits, and profit margin with our hourly rate calculator. It accounts for actual billable days per year for a more accurate calculation. Use it to set minimum rates for time-and-materials work and to back up your flat-rate project pricing.With Houzz Pro’s Time and Expense Tracking tool, you can track and enter time and expenses as they happen, for real-time data on project costs and profitability. With the mobile app, your field crews can use multiple stopwatches for task tracking, and you can invoice for them later.

How to calculate an hourly billing rate for construction workers

Calculating how much to charge for construction workers includes knowing each worker’s salary, work schedule, number of vacation/sick days, number of holidays, benefits value, and your desired profit margin.You’ll want to include owner compensation in your target salary, as working for free inflates your margin.Also, approximately 200 productive days per year is a realistic target for field trades. That takes into account weather, permit delays, punchlist work, and standby time.Here’s how a breakeven hourly billing rate is calculated:
  • Tally the worker’s total compensation, including salary, benefits, and workers' compensation insurance. Divide it by the number of hours they worked in a year to determine their total loaded hourly wage.
  • Determine the annual total billable hours. Take into consideration holidays, vacation/sick time, delays, etc. This is often between 1,600 and 1,840 hours per year.
  • Add up all company overhead costs and divide by the number of annual billable hours for all employees.
  • The breakeven hourly rate formula is:
Breakeven rate = Loaded hourly wage + Hourly overhead
  • Add your profit margin to come up with an hourly billing rate.
Reevaluate your hourly billing rate at least once a year or whenever costs change.Our breakeven hourly rate calculator will help you determine the minimum rate you need to bill to cover a worker’s salary, benefits, and company overhead and profit.

How much should your hourly billing rate be?

Here’s an example of how our hourly rate calculator can help you determine how much your billing rate should be.Calculator inputs:
  • Annual salary target: $80,000
  • Annual overhead costs: $30,000
  • Hours per day: 8
  • Days per week: 5
  • Weeks per year: 52
  • Vacation days: 10
  • Sick days: 5
  • Public holidays: 10
  • Annual expenses (optional)
  • Health insurance: $6,000 per year
  • Tools and equipment: $5,000 per year
  • Training and licenses: $1,000 per year
  • Desired profit margin: 20%
Here are the results provided by the billing rate calculator:
  • Actual billable hours per year: 1,880
  • Breakeven rate: $58.51 per hour
  • Minimum billable rate: $73.14 per hour
  • Recommended rate: $80.45 per hour
  • Annual revenue target: $137,500
You can also use Houzz’s Markup Calculator or Profit Margin Calculator to determine what to charge for labor based on your profitability goals.For insight into project and company profitability, our Financial Reports Feature keeps you informed in real time.

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