How Much Should a Contractor Charge Per Hour?

Typical charge-out rates by trade

Rates vary widely by region, license requirements, and demand, but these U.S. ranges are common for established small operations billing time and materials:

Use these to sanity-check, not to price. Your neighbor's rate is built on their insurance costs, their truck payments, and their utilization — not yours.

The rate is an output, not an opinion

A defensible hourly rate is built from the bottom up, in three layers:

1. Burdened labor cost. Wage plus payroll taxes, workers' comp, insurance, benefits, and paid time off. For most trades this lands 30–50% above the wage — calculate yours here.
2. Overhead recovery. The truck, the phone, the software, the ads, the estimating time. Spread a year of it across a year of billable hours. At 1,400 billable hours, $35,000 of annual overhead adds $25/hr all by itself.
3. Profit margin. On top of everything, applied to the price: rate = cost ÷ (1 − margin). Profit is not what's left over if you're lucky — it's a line item, or it doesn't happen.

Worked through: a $28 wage with 40% burden is $39.20. Add $25/hr of overhead recovery and you're at $64.20 break-even. At a 20% margin, the hour has to sell for $80.25. That's how a "$28/hr carpenter" becomes an $80/hr line on an invoice without anyone getting rich — and why contractors who charge $50 because it "sounds fair" are slowly going broke in good markets.

The utilization trap

The most common rate mistake isn't the wage or the overhead — it's assuming 2,080 billable hours. Between drive time, material runs, estimates, weather, and warranty visits, a busy solo contractor might bill 1,200–1,500 hours a year. Every fixed cost divides by that smaller number. If you calculated your rate assuming full-time billing, your real break-even is 25–40% higher than you think.