Solo electrician target $90k take-home
Burden 30%, overhead $45k, 1,500 billable hr, 20% profit on cost.
Shop rate roughly $95–$110/hr before trip minimums.
Calculator · Free
Shop Rate Calculator
Determine the shop rate you must charge per billable hour to cover overhead and hit your income target.
Required billing rate
$121.93per billable hour
4,056 billable hours a year have to carry $494,558 of cost and target.
- Billable hours available6,240 paid hours at 65% utilization
- 4,056 hrs
- Burdened labor cost$44.16/hr across every paid hour, billable or not
- $275,558
- Fixed overhead
- $148,000
- Owner income target
- $95,000
- Less material marginParts profit that labor no longer has to cover
- −$24,000
- Cost per billable hourBreak-even before any profit
- $98.51/hr
| Utilization | Billable hours | Required rate | Change vs. today |
|---|---|---|---|
| 50% | 3,120 | $158.51/hr | +$36.58 |
| 55% | 3,432 | $144.10/hr | +$22.17 |
| 60% | 3,744 | $132.09/hr | +$10.16 |
| 65% | 4,056 | $121.93/hr | Your input |
| 70% | 4,368 | $113.22/hr | −$8.71 |
| 75% | 4,680 | $105.67/hr | −$16.26 |
| 80% | 4,992 | $99.07/hr | −$22.86 |
| Every point of utilization | $1.85/hr | Moves the rate this much |
Your required rate sits inside the normal market band
$121.93/hr is inside the $95–$225 band typical of residential service work, so the model closes. Note that moving utilization from 65% to 75% would drop the required rate to $105.67/hr without losing a single job.
You pay for every hour, not just the billable ones
At 65% utilization, 2,184 paid hours a year — $96,445 of burdened wage — never appear on an invoice. That cost is already inside the rate above. It is also why route density and dispatching beat a price increase: they cost nothing and they move the same lever.
Quick answer
Shop rate is what you must collect per billable hour to cover burdened labor, overhead, owner income, and profit — not what you pay in the field. A common approach: add annual overhead plus owner target income, divide by billable hours per year (often 55–70% of paid hours), then add profit. Many one-truck shops need roughly $95–$150/hour depending on trade, utilization, and overhead. Enter your costs and utilization below to see the rate your math requires before you compare to market.
What this assumes
- Billable utilization is the share of paid hours actually invoiced to customers.
- Overhead includes every cost not directly attributable to a specific job.
- Payroll burden covers employer taxes, workers' compensation, liability insurance and benefits.
Understanding the result
Your rate is arithmetic, not a market survey
Competitors' rates tell you what the market tolerates, not what your business needs. Start from the number your costs require, then decide whether you can win work at that price. If you cannot, the problem is your cost structure or your positioning — not your rate.
Utilization is the hidden lever
Moving from 55% to 70% billable utilization has a larger effect on profitability than a 10% rate increase, and it does not cost you a single job. Route density, better dispatching and reducing callbacks all convert directly into margin.
Trip charges and minimums protect utilization
A $95 service call minimum on a 30-minute job that required 45 minutes of drive time is not gouging — it is recovering the non-billable hour. Shops that waive trip charges on small jobs consistently underprice and burn out technicians with unpaid windshield time.
Rate tiers for different work types
Emergency, after-hours, and weekend work should carry a multiplier — typically 1.5× to 2× the standard rate. Diagnostic time on complex commercial equipment commands a higher rate than a panel swap. One flat rate for all work types leaves money on the table.
How the math works
Target annual owner income plus labor burden (taxes, benefits), overhead allocation, and desired profit divide by billable hours per year to yield shop hourly rate. Optional trip minimum converts small jobs to effective rate.
Where to find each input
- Personal income goal — after-tax or pre-tax per your method
- Burden percent — payroll tax, GL, WC typical 25–35%
- Overhead — rent, vehicles, software, insurance annual total
- Billable hours — tech hours sold, not clock hours (often 1,400–1,800/yr)
Worked examples
Two-tech HVAC shop
Combined goals, shared overhead, 2,800 billable hr.
Rate lower per hr than solo but higher revenue — overhead spread across more hours.
Part-time side trade 600 hr/yr
Lower overhead, no shop rent.
Rate still mid-$80s if income goal is full-time equivalent — do not underprice side work.
What this does not include
- Material markup and margin on parts
- Job-specific risk premium
- Union scale compliance
- Prevailing wage jobs
Regional adjustment
Income goals differ by metro COL — same formula, different inputs. Compare output to local market using repair-cost-estimator inverse check.
Accuracy and references
Burden and overhead structure follows PHCC and NECA financial benchmarking; billable hour targets from industry utilization studies.
Counterpart bridge
What homeowners see for the same decision
Homeowners use the paired tool for benchmarks and questions before they hire. Align your numbers with what they are already comparing against.
Open Home Repair Cost EstimatorHomeowner counterpart
We publish Home Repair Cost Estimator for the same decision from the customer side — use it to sanity-check how your bid will read against national ranges.
View Repair CostCommon questions
What is a shop rate?
A shop rate is the hourly amount your business must collect on every billable hour to cover burdened labor, overhead, owner income, and profit. It is not what you pay technicians — it is what customers pay. Most one-truck service shops need $95 to $150/hour depending on trade, utilization, and overhead load.
How do you calculate shop rate?
Add annual overhead plus owner target income, divide by billable hours per year, then add your target profit margin. Example: $120,000 overhead + $80,000 owner income = $200,000 ÷ 1,200 billable hours (60% of 2,000 paid hours) = $167/hour loaded cost before profit.
What should an electrician charge per hour?
Residential electricians typically charge $75 to $125 per hour, with a $95 to $150 service call minimum. A shop rate covering $35/hour burdened labor, 65% utilization, and 25% overhead on a one-truck operation lands around $95 to $110/hour. Metro areas run 20 to 40% higher.
What is a good shop rate for a plumber?
Residential plumbers charge $85 to $150 per hour with a $100 to $175 service call minimum. A two-person shop with $40/hour burdened labor, 60% billable utilization, and $8,000/month overhead on one truck needs roughly $115 to $135/hour to hit a 10% net margin.
What is billable utilization for a contractor?
Most single-truck service contractors bill 55 to 70% of paid hours. A technician paid for 2,080 hours/year bills 1,150 to 1,450 hours. The rest is drive time, shop time, training, callbacks, and slow days. Below 50% utilization, the math on any rate fails.
What should an HVAC technician charge per hour?
HVAC service rates run $90 to $150 per hour with a $100 to $175 diagnostic fee. Refrigerant work and commercial equipment command higher rates. A shop with $42/hour burdened labor and 62% utilization needs roughly $120 to $140/hour before profit.
How much should a handyman charge per hour?
Handymen charge $50 to $80 per hour without licensing overhead. A licensed contractor doing handyman work should charge trade rates — $75 to $110/hour — because liability insurance, licensing, and warranty obligations cost the same regardless of job size.
What is the difference between shop rate and labor rate?
Labor rate is what the customer pays per hour. Shop rate is what the business needs to collect per billable hour to cover all costs including overhead and owner income. Shop rate is always higher than the technician's hourly wage — typically 2.5 to 3.5× the base wage.
Should I charge a trip fee?
Yes. A $75 to $150 trip or diagnostic fee covers windshield time that is not billable at the hourly rate. Shops without a trip fee need a higher hourly rate to compensate, which prices them out of small jobs. The trip fee makes small jobs profitable.
How many billable hours per year does a technician have?
A full-time technician works roughly 2,080 paid hours per year. At 60% utilization, that is 1,248 billable hours. At 70%, it is 1,456. Increasing utilization from 60% to 70% adds 208 billable hours — equivalent to adding a part-time technician at no additional salary cost.
What hourly rate covers $5000 per month overhead?
At $5,000/month overhead ($60,000/year), 60% utilization, and $35/hour burdened labor on one technician: ($60,000 + $35 × 1,248) ÷ 1,248 = $83/hour break-even before owner income. Add $60,000 owner income and the rate becomes $131/hour.
Billable vs clock hours?
Use sold hours only — 1,800 clock with 60% utilization ≈ 1,080 billable unless you track higher.
Where does profit go?
Applied after burden and overhead — typically 10–20% of direct job cost or built into rate.
Should owners pay themselves hourly?
Many shops blend owner salary into burden — stay consistent year to year.
What trip charge?
Separate line or minimum 1–1.5 hr — tool optional field.
How often to recalculate?
Quarterly or when insurance or rent step-changes.
Is this the same as effective hourly rate?
No — effective rate backs into reality from actual invoices; use that tool to compare.
Do I charge the same rate for helpers?
Blended shop rate or lower helper billing rate — pick one policy.
What about unbillable drive time?
Include in overhead or use loaded labor rate — do not ignore it.
Should I match competitors?
Benchmark after math — racing to lowest rate burns shops.
Does markup replace profit in rate?
No double count — either profit in rate or in material margin, account separately.
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