Free service pricing tool
Service Hourly Rate Calculator
Calculate the minimum hourly rate needed to cover your real costs, then set a target billing rate that supports the profit margin you want.
Simple calculator
Updates liveEnter the real cost of one billable hour
Labor cost
Capacity & overhead
Current pricing
Minimum rateLoaded labor and overhead are recovered only through billable hours. The target rate then adds the selected profit margin and billing leakage.
Advanced calculator
Annual capacity modelBuild the complete service pricing model
Service team
Annual overhead
Owner compensation & profit
Current pricing
Advanced target rateAnnual labor, owner compensation and overhead are divided by realistic billable capacity, then direct cost, margin, leakage and capacity reserve are reflected in the price.
Utilization sensitivity
Same costs and marginHow billable utilization changes the rate
| Utilization | Billable hours | Break-even rate | Target rate | Current-rate margin | Signal |
|---|
Profit sensitivity
Current capacityRate required at different target margins
| Target margin | Required billing rate | Annual revenue | Annual operating profit | Increase vs current rate |
|---|
Pricing translation
Uses target rateHourly rate into common service quotes
Half-day, 4 hours$0
Full day, 8 hours$0
20-hour engagement$0
40-hour engagement$0
Reading the result
Your employee’s hourly wage is not your hourly cost.
Service businesses must recover payroll burden, nonbillable time, overhead and direct job expenses through the hours that can actually be invoiced.
The target rate is higher than the break-even rate because profit margin is calculated as a percentage of revenue, not as a simple markup on cost.