How to set your hourly rate as a tradesperson (the real math)

The trap of "what everyone charges"

Copying the going rate assumes your costs equal your neighbor’s. They don’t: different van, insurance, tools, commute radius, experience. The going rate is a sanity check, not a starting point.

Step 1 — count your billable hours honestly

A full-time year is ~2,080 hours. Now subtract: quotes and site visits, driving, supply runs, admin, vacations, sick days, slow season. Most solo tradespeople actually bill 1,100 to 1,400 hours a year. That number is the divisor of everything.

Step 2 — add up your real annual costs

• Vehicle: payments, fuel, insurance, maintenance — easily $8–15k
• Tools and equipment renewal
• Insurance (liability, disability), license fees, certifications
• Phone, software, accounting, marketing
• Workshop or storage if any

Call this overhead. For many solo trades it lands between $18k and $35k a year.

Step 3 — decide your salary, then add margin

Pick the salary you actually want — say $65,000. Then add 10–15 % margin: the business must earn more than it pays you, or the first surprise (van repair, dead month) comes out of your pocket.

The formula

(Target salary + overhead) × (1 + margin) ÷ billable hours = hourly rate

Example: ($65,000 + $25,000) × 1.12 ÷ 1,250 h ≈ $81/hour. If you’re charging $55 because "that’s the market", you’re paying to work.

Then defend it with detail

A detailed estimate justifies a strong rate — a vague one invites haggling. Pro Speak Artisan prices your dictated estimates with your rates and flags any line priced below your own historical average. More pricing guides.