A contractor hourly rate calculator works backwards from the money you need to the rate you charge. Add up what you want to pay yourself and what it costs to run the business for a year, divide by the hours you can actually bill, and you have your break-even hourly rate. Add your profit margin on top and that’s the rate to quote.
Open the free hourly rate calculator in your browser. No login, no email, nothing to pay.
Open the free toolThe free Contruva hourly rate calculator does that math for you and shows your billable hours per year, break-even rate, recommended rate, day rate and the revenue you need each month. No login, no email. Below is how each number is worked out, with a full example in Canadian dollars.
How to use the hourly rate calculator
Your yearly pay before personal income tax. Treat it like a salary the business owes you.
Weeks worked per year (after holidays, slow season and sick days) and the hours you put in during a normal week.
The share of those hours you can actually charge a customer for. Quoting, driving, supply runs and paperwork usually aren’t billable.
Truck and fuel, insurance, tools and equipment, phone and software, and anything else the business pays for whether you work or not.
What the business keeps on top of your pay and overhead, for slow months, new equipment and growth.
The results update as you type, so you can try different numbers and see what moves your rate the most. (Spoiler: it’s usually the billable percentage.)
How the hourly rate is calculated
| Result | Formula |
|---|---|
| Billable hours per year | Weeks worked × hours per week × billable % |
| Break-even hourly rate | (Your pay + yearly overhead) ÷ billable hours |
| Recommended hourly rate | Break-even rate ÷ (1 − profit margin) |
| Day rate | Recommended rate × 8 hours |
| Revenue needed per year | Recommended rate × billable hours |
| Revenue needed per month | Revenue per year ÷ 12 |
The break-even rate pays you and keeps the lights on, with nothing left over. The recommended rate divides by one minus your margin rather than simply adding a percentage, so the profit really is that share of every dollar you bill. The same logic is behind the contractor markup calculator.
A worked example in CAD
Sam runs a one-truck handyman and small renovation business outside Ottawa. Here are Sam’s numbers:
| Input | Sam’s number |
|---|---|
| Income to pay yourself | $75,000 |
| Weeks worked per year | 48 |
| Hours per week | 45 |
| Billable hours | 70% |
| Truck and fuel | $14,000 |
| Insurance | $4,500 |
| Tools and equipment | $5,000 |
| Phone and software | $4,000 |
| Other (accounting, advertising, licences) | $2,500 |
| Target profit margin | 15% |
48 weeks × 45 hours = 2,160 hours worked. 70% of those are billable: 1,512 hours.
$75,000 pay plus $30,000 overhead.
$105,000 ÷ 1,512 hours. Charge less than this and Sam is paying to work.
$69.44 ÷ (1 − 0.15). This is the rate to quote.
$81.70 × 8 hours, before rounding.
About $10,294 a month in billed work, before sales tax.
Sam was charging $65 an hour because that’s what a friend charged. At 1,512 billable hours, that’s $98,280 a year: almost $7,000 short of just covering pay and overhead, with no profit at all.
Why billable hours matter most
The most common mistake is dividing by 2,080 hours (40 hours × 52 weeks). Nobody in the trades bills 2,080 hours. You take holidays, it rains, a customer cancels, and a good part of every day goes to driving, quoting, picking up materials and chasing invoices. Here’s how Sam’s rate changes with the billable percentage, everything else the same:
| Billable % | Billable hours | Break-even rate | Recommended rate (15% margin) |
|---|---|---|---|
| 50% | 1,080 | $97.22 | $114.38 |
| 60% | 1,296 | $81.02 | $95.32 |
| 70% | 1,512 | $69.44 | $81.70 |
| 80% | 1,728 | $60.76 | $71.49 |
| 90% | 1,944 | $54.01 | $63.54 |
Two lessons. First, be honest about your billable share; track a few normal weeks if you’re not sure. Second, every hour of admin you cut is worth real money. Getting from 60% to 70% billable is worth more than $13 an hour to Sam, without charging customers a cent more. That’s the case for sending quotes from the truck and letting software chase payments, covered in how to get paid faster as a contractor.
What to put in overhead
Overhead is every cost the business pays whether you’re on a job or not. Pull last year’s bank and card statements and go line by line. The calculator groups it like this:
- Truck and fuel: loan or lease payments, fuel, maintenance, tires, registration and parking.
- Insurance: general liability, vehicle, tools and equipment, and your workers’ compensation coverage where it applies.
- Tools and equipment: purchases and a yearly amount for replacing what wears out.
- Phone and software: phone plans, quoting and invoicing software, accounting software, website.
- Other: accountant and bookkeeping, advertising, licences and permits, training, office or shop rent, bank and card fees.
Don’t put job materials or subcontractors in overhead. Those belong to each job and get charged separately, with a markup. If you have employees, their wages are a job cost too; this calculator is for working out the rate for your own time.
What to pay yourself
Enter the income you’d need if someone else were paying you a salary for this work. Then remember that, unlike an employee, you’re covering things an employer normally pays. In Canada, self-employed people pay both the employee and employer share of CPP contributions, and there’s no paid vacation or employer benefits unless you build them into your rate. Set your pay high enough to cover income tax, CPP and the benefits you want. This isn’t tax advice; the CRA or your accountant can tell you what applies to you.
Hourly, day rate or flat price?
The hourly rate is your foundation, but you don’t have to quote by the hour. Most customers prefer a fixed price, and fixed prices reward you for working efficiently.
| Pricing method | Best for | How to use your rate |
|---|---|---|
| Hourly | Service calls, repairs, unclear scope | Quote the recommended rate, with a minimum call-out |
| Day rate | Multi-day work, trade-to-trade jobs | Recommended rate × 8, rounded to a clean number |
| Flat price | Defined jobs like a deck, a bathroom, a furnace swap | Estimated hours × your rate, plus materials with markup |
For a flat price, estimate the hours honestly, multiply by your rate, then add materials and subcontractors with your markup. How much to charge for handyman work walks through minimum charges and flat pricing, and how to price a contractor job covers overhead and markup on bigger jobs.
Common rate mistakes
- Copying a competitor’s rate. Their overhead and billable hours aren’t yours.
- Dividing by 2,080 hours. You’ll set a rate that only works if you never drive, quote or take a day off.
- Treating break-even as the rate. Break-even leaves nothing for a slow winter or a broken tool.
- Forgetting to raise it. Insurance, fuel and software costs change every year. Re-run the numbers at least once a year.
- Discounting the hour instead of the scope. If a customer can’t afford the job, offer less work, not a cheaper hour.
Put the rate to work
Once you know your number, use it everywhere. In Contruva, your rates live in your price catalog, so every quote uses them automatically and Contruva AI can draft a quote from jobs you’ve already won. Crew hours, receipts and mileage roll into job costing, so you can see whether each job actually earned your rate. Invoices go out from site with a pay link and automatic reminders, which gives you back the unbillable hours you used to spend chasing payments.
It’s one plan, Contruva Pro, at $249.99 CAD a month with everything included. Try it free for 7 days, no credit card needed.