FREE CONTRACTOR HOURLY RATE CALCULATOR
Build a sustainable billable rate from the pay you need, the overhead the business carries, the hours customers can actually be billed, and a profit target.
1,200 billable hours/year · $78,000 needed for pay and overhead before profit.
THE CAPACITY REALITY
Estimates, travel, customer messages, bookkeeping, equipment care, and marketing still consume the week. If you divide annual costs by every hour worked, the rate can quietly come up short.
Start with a realistic billable-hours target. The calculator spreads your pay and overhead across only those hours, then adds the margin selected for the business.
Hourly rate = (Pay + overhead) ÷ billable hours ÷ (1 − margin)BUILD A REAL BASELINE
Use recent expenses and conservative capacity instead of the best-case version of the year.
Set the annual compensation the work needs to provide before treating anything as business profit.
Count the recurring expenses required to remain insured, equipped, reachable, and operating.
Leave room for nonbillable work, holidays, weather, illness, cancellations, and slow periods.
Add room for ownership risk, reserves, reinvestment, growth, and surprises, not personal labor.
PRICE THE WHOLE JOB
Use the hourly result as a labor line item, then add materials, project costs, terms, and a deposit in Northmethod Quotes.
COMMON QUESTIONS
A billable hour is time you can charge directly to a customer. Travel, estimating, bookkeeping, marketing, maintenance, and other work may consume time without being billable, so using all 40 weekly hours usually overstates capacity.
Pay compensates you for the work you perform. Business profit is what remains for risk, reinvestment, reserves, and ownership after labor and overhead are covered.
Include recurring business expenses such as insurance, vehicle and fuel costs, rent, software, phone, bookkeeping, licenses, advertising, tools, repairs, and office costs. Handle job-specific materials and subcontractors in the individual quote.
Not necessarily. Fixed-price jobs, emergency work, specialty skills, risk, travel, market conditions, minimum charges, and scope can justify a different price. Use the result as a planning baseline, not an automatic promise to customers.
No. This calculator runs in your browser. Northmethod does not receive the pay, overhead, capacity, margin, or rate figures you enter.