The short answer: in our eight worked trade examples, one billable hour costs between $44.16 (a two-person house cleaning business) and $69.95 (a three-person plumbing shop) before any profit. To calculate your labor rate, add a year of everyone's wages (yours included) plus labor burden, add a year of overhead, and divide by the hours you actually bill. That number is your break-even rate: the lowest you can charge for an hour without losing money.
The worked rates come from the example shops in our trade spreadsheets, which are example settings, not survey data. Where a figure came from an owner's own pricing, it is marked as one owner's number, not an average.
The break-even formula in one line
Break-even rate = (wages + labor burden + overhead) / billable hours. Every piece matters: leave one out and the rate comes out too low.
| Piece | What goes in it | Where it's explained |
|---|---|---|
| Wages | Every person's hourly wage times paid hours, owner first | Step 1 below |
| Labor burden | Payroll taxes, workers' comp, benefits | Step 2 below |
| Overhead | Rent, insurance, software, marketing, office side of vehicles | Overhead and profit guide |
| Billable hours | Hours spent doing paid work, not hours paid | Step 3 below |
Profit is not in the formula. It goes on top of the full job cost, which the markup vs margin guide covers.
Step 1: what should you pay yourself?
Pay yourself the hourly wage it would cost to replace you, and put it in the math like any other worker's. Set a floor you would accept from any employer. For example, $1,000 a week is $52,000 a year, or $25 an hour over 2,080 hours. If your wage isn't in the formula, every hour you work is priced as free, and whatever is left at year end becomes your pay by accident.
What leaving yourself out does to the rate, in each example shop:
| Trade example | Break-even with owner's wage | Owner's wage left out |
|---|---|---|
| House cleaning | $44.16 | $19.09 |
| Lawn care | $58.12 | $29.83 |
| Pressure washing | $54.31 | $26.60 |
| Painting | $49.25 | $30.16 |
| Drywall | $60.30 | $38.88 |
| Fencing | $55.27 | $34.79 |
| Plumbing | $69.95 | $44.05 |
| Roofing | $68.55 | $50.28 |
The smaller the crew, the bigger the drop. In a two-person cleaning or lawn business, the owner's wage is about half of what the rate has to cover.
Hourly rate vs what you pay yourself
Your wage and your hourly rate are two different numbers, and the rate is always the bigger one. The wage is what you take home for an hour of work. The rate is what an hour on a job has to bring in to pay that wage, the burden on it, the hours you can't bill, and the overhead.
Here is the gap on one painter: a $25 wage, about $32 an hour once taxes and insurance are added, billed to customers at $64 an hour. The painter never sees $64. Most of the difference pays for time and costs no customer is billed for directly.
Profit is a third number again. Your wage is paid before profit; profit is what the business keeps after you are paid. The overhead and profit guide explains why the two must never be mixed.
Step 2: how to calculate labor burden
Labor burden is what a worker costs on top of the wage, and it usually adds about 17% to 27% in our trade examples. It covers payroll taxes, workers' comp, unemployment insurance and any benefits.
The math is wage x (1 + burden). A $25 worker with a 20% burden costs $25 x 1.20 = $30 an hour, before a single hour of drive time or overhead. Owners we studied land in different places depending on what they count:
- One painting coach multiplies the average painter wage by 1.2 for comp and taxes.
- One drywall owner adds 47% to every labor dollar, because he counts liability insurance in it too.
- A $25 painter who costs about $32 with everything added carries a 28% burden.
The spreadsheets use 12% payroll taxes plus a workers' comp rate you set for your trade:
| Trade example | Workers' comp setting | Total burden |
|---|---|---|
| House cleaning, pressure washing | 5% | 17% |
| Plumbing | 6% | 18% |
| Lawn care, painting, fencing | 8% | 20% |
| Drywall | 12% | 24% |
| Roofing | 15% | 27% |
These are example settings. Workers' comp varies a lot by state and by trade, so use the rate on your own policy.
Step 3: how many billable hours do you really have?
Billable hours are the hours spent doing paid work on a job, and in our examples they are only 67% to 73% of the hours paid. The rest goes to driving between jobs, quoting, supply runs, loading the truck, rain days, repairs and paperwork.
You can't know your billable share without tracking it. For two weeks, write down the start and end of every job and every drive, then add up the job hours and divide by the hours paid. If a cleaner is paid 40 hours and 29 of them were inside customers' homes, the billable share is 29 / 40 = 72.5%.
One lawn care owner we studied plans on 80% billable for a crew member. The spreadsheets start crews at 75% to 80% and owners at 45% to 65%, because the owner also sells, estimates and runs the office. The roofing owner, who does all the estimating, is set at 45%.
What dividing by paid hours costs, by example shop:
| Trade example | Paid hours / year | Billable hours / year | Break-even rate | Rate if you divide by paid hours | Short over a year |
|---|---|---|---|---|---|
| House cleaning | 3,600 | 2,520 | $44.16 | $30.91 | $33,386 |
| Lawn care | 3,200 | 2,290 | $58.12 | $41.59 | $37,850 |
| Pressure washing | 3,400 | 2,280 | $54.31 | $36.42 | $40,788 |
| Painting | 6,240 | 4,576 | $49.25 | $36.12 | $60,103 |
| Drywall | 6,240 | 4,576 | $60.30 | $44.22 | $73,585 |
| Fencing | 6,240 | 4,264 | $55.27 | $37.77 | $74,635 |
| Plumbing | 6,240 | 4,264 | $69.95 | $47.80 | $94,457 |
| Roofing | 7,580 | 5,061 | $68.55 | $45.77 | $115,297 |
The shortfall is the cost of every non-billable hour, spread over nothing. It comes out of profit first, then out of your pay.
Step 4: a worked labor rate, start to finish
The house cleaning example shows the whole calculation in four lines, and it lands at $44.16 per billable hour.
| Line | House cleaning example |
|---|---|
| Wages for owner and one cleaner, plus 17% burden | $101,088 |
| Overhead for the year | $10,200 |
| Total to cover | $111,288 |
| Billable hours (2,520 of 3,600 paid) | $111,288 / 2,520 = $44.16 |
Its sample job, a 2,000 sq ft home cleaned every two weeks for $256.55 a visit, earns $57.51 per labor hour. The gap between $44.16 and $57.51 is the cushion and profit. One cleaning owner we studied bills $60 a man-hour, close to the example's $57.51.
Break-even rates across eight trades
In our eight example shops, the break-even rate runs from $44.16 to $69.95, and what the sample job earns per labor hour runs from $57.51 to $101.35.
| Trade example | Crew | Break-even rate | Sample job earns per labor hour |
|---|---|---|---|
| House cleaning | 2 | $44.16 | $57.51 |
| Painting | 3 | $49.25 | $75.02 |
| Pressure washing | 2 | $54.31 | $79.93 |
| Fencing | 3 | $55.27 | $96.83 |
| Lawn care | 2 | $58.12 | $77.95 |
| Drywall | 3 | $60.30 | $81.88 |
| Roofing | 4 | $68.55 | $101.35 |
| Plumbing | 3 | $69.95 | $99.46 |
These come from example wages and overhead. Your own number will be different, which is why it's worth working out.
Do wage multipliers like 2x or 2.5x give the right rate?
Multipliers on wage land close in some trades and far off in others, so use them only to check your worked rate. Here is how common rules compare with the example shops:
| Rule | Result | Example shop |
|---|---|---|
| Painting: $30 average wage x 1.2 burden x 2 | $72 an hour | Painting breaks even at $49.25, earns $75.02 |
| Cleaning: 2.5 times an $18 cleaner wage | $45 an hour | Cleaning breaks even at $44.16 |
| Lawn care: $25 x 1.2, divided by 80% billable | $37.50 per billable hour, before overhead | Lawn breaks even at $58.12 with overhead |
Pressure washing shows the same thing for a crew. One pressure washing owner we studied puts a two-technician crew, paid about $20 an hour each, at $90 to $150 an hour just to break even. The pressure washing example's two-person crew comes to $108.62 an hour (2 x $54.31), inside that range. The 2.5x cleaning rule, on the other hand, only just covers costs once the owner's own wage is counted.
Four mistakes that make the labor rate too low
Each of these mistakes shows up in the example numbers above, and each one prices hours below what they cost.
- Using the wage as the rate. A $25 worker at 20% burden and 80% billable costs $37.50 per billable hour before a dollar of overhead.
- Leaving yourself out. It halves the rate in the two-person examples (cleaning: $44.16 to $19.09).
- Dividing by 2,080 billable hours. Even a busy crew loses hours to weather, driving and callbacks, and the owner loses more to quoting.
- Never checking. Compare quoted hours with actual hours on every job; the job costing guide shows how, and it's the only way to see your billable share drift.
From break-even rate to a price
The break-even rate is a floor, not a price. Charge every labor hour at it (including the hours you usually forget, like quoting and supply runs), add materials with a markup, then add a cushion and profit on the full cost. The markup vs margin guide shows how to set that profit so you keep what you planned, and quote vs estimate covers how to put the number on paper.
Work out your own labor rate
The free true hourly rate calculator runs steps 1 to 4 in your browser with your own wages, crew, burden, billable share and overhead. Each trade's Pricing Calculator uses the same Shop Setup and prices every quote from it: House Cleaning, Lawn Care, Pressure Washing, Painting, Drywall, Roofing, Fencing and Plumbing.