Are you charging enough for your labour?
One of the most common pricing mistakes contractors make is calculating their hourly rate based primarily on what they pay themselves or their employees.
Your actual cost of providing labour is considerably higher.
A profitable hourly rate needs to account for several factors.
Employee costs: Wages, payroll taxes, vacation, statutory holidays, insurance and employee benefits.
Non-billable time: Time spent estimating, travelling, managing the business and performing other activities that cannot be charged directly to customers.
Business overhead: Vehicles, equipment, insurance, administration, accounting, software and other operating expenses.
Profit: The amount your business needs to earn beyond its operating costs.
The key is to calculate your annual business costs, allocate those costs across your realistic billable hours and then account for your desired profit margin.
We've made this easier.
CleverWorks Digital offers a free Excel Hourly Rate Calculator designed to help contractors and small service businesses calculate their required billing rates.
Download the free calculator:
For more comprehensive labour-rate calculations, job estimates and profitability analysis, explore our Contractor Pricing Kit: