Service Business Hourly Rate Calculator
Find the hourly rate a small service business must charge to cover income, overhead, payroll burden, and a profit target. Trade presets, no signup.
How this is calculated
The calculator finds the rate needed to cover income, overhead, payroll burden, and a profit target — divided across your actual billable hours, not paid hours.
billableHoursPerYear = weeks × daysPerWeek × hoursPerDay × utilization
requiredIncome = takeHome × (1 + selfEmploymentTaxPct)
breakEvenRate = (requiredIncome + overhead + payrollBurden) / billableHoursPerYear
recommendedRate (margin) = breakEvenRate / (1 − profitTargetPct)
recommendedRate (markup) = breakEvenRate × (1 + profitTargetPct)Margin vs. markup: margin is profit ÷ price; markup is profit ÷ cost. A 20% margin equals a 25% markup. We show both so you can quote either way.
The dangerous incumbent bug: dividing overhead by 2,080 paid hours instead of billable hours. Solo operators rarely bill every paid hour — utilization defaults to 60% for that reason.
Billable hours is the name for that divisor and effective hourly rate for what you actually earn once it is applied. On a crew rather than a solo operation, crew utilization measured rather than assumed is the safer input.
The two cost inputs above the line are worth deriving rather than estimating: the burden side of a wage turns pay into its true cost, and the overhead recovery rate calculator turns a year of fixed bills into the overhead this rate has to carry.
Sources: ServiceTitan break-even rate guide; Markup & Profit on labor burden; HiBob fully-burdened labor; Mixo + ServiceTitan billable-hour conventions.