Your wage is not your cost, and a paid hour is not a billable hour. This works out what an hour has to sell for once labor burden, the hours you cannot invoice, and overhead are all carried.
A $32 wage at 35% burden is a $43.20 cost before a single unbillable minute.
Hours you can actually sell
Your utilization vs published benchmarks
How the rate is worked out
= paid hours × utilization= wage × (1 + burden) / utilization= annual overhead / total billable hours= (line 2 + line 3) / (1 - target margin)Line 4 divides rather than multiplies. That is what makes the target a margin on revenue instead of a markup on cost, and the two are never the same number.
Required hourly rate
$0
Nothing else changes. Only the share of paid hours you manage to invoice. This is the variable almost nobody puts in the formula, and it moves the rate more than wages do.
| Utilization | Billable hrs | Break-even | Your rate |
|---|
| The number | Added to cost, you get | Wanted as a margin, you need |
|---|
A full-time year is 2,080 paid hours, which is 40 hours across 52 weeks. Almost nobody bills that. Published field service figures put the average field technician at 58% to 65% of working hours billed, which is roughly 1,200 to 1,350 billable hours a year. Independent contractors land in a similar place, typically billing 60% to 70% of their working hours.
The missing third is not idleness. It is drive time between calls, quoting work you did not win, callbacks, warranty visits, paperwork, shop time, training, holidays and paid time off. All of it is paid. None of it is invoiced. Divide your annual costs by 2,080 and you have priced a year that does not exist, then wondered why a busy season did not produce a profit.
The correction is one line. Billable hours = paid hours × utilization. At 2,080 paid hours and 65% utilization that is 1,352 hours, not 2,080. Every cost you recover has to be recovered across those 1,352, which raises the required rate by more than half.
Published field service benchmarks treat 60% to 80% as strong. Many HVAC and field service companies target 65% to 85%, and 70% to 80% is considered a strong target for field technicians in a well-run shop. The average sits below that, which is the gap most contractors are pricing through without knowing it.
Utilization is worth attacking before price is. Every point you recover is an hour you can already invoice with staff you are already paying, and it lowers the rate you need rather than raising the number you have to defend to a customer. Tighter routing, quoting from photos instead of a second visit, and cutting callbacks all show up in the same figure.
Two multipliers sit between a wage and a rate, and they compound.
First, labor burden. Payroll taxes, workers compensation, liability insurance, benefits, paid time off and training add 30% to 60% of base wage in published 2026 figures, with residential around 30% to 45% and high-risk trades higher because workers compensation alone can run 7% to 15% of payroll on roofing. A technician at $25 an hour commonly costs $40 to $55 an hour fully loaded.
Second, utilization. You pay the burdened wage for every hour, but you only invoice some of them, so the real cost of a billable hour is the burdened wage divided by utilization:
Labor cost per billable hour = burdened wage / utilization. A $32 wage at 35% burden is $43.20 an hour paid. At 65% utilization it costs $66.46 for every hour you can actually put on an invoice. That is the number to price against, and it is more than double the wage.
Overhead is the office, insurance, vehicles, software, advertising, admin salaries and your own pay, anything not chargeable to a specific job. On an hourly rate it is recovered per billable hour, not per paid hour, for the same reason as above.
Divide annual overhead by total billable hours across all field staff. Carry $180,000 of overhead with three technicians at 1,352 billable hours each, so 4,056 hours in total, and that is $44.38 an hour before labor and before profit. Add fourth technician and the same overhead spreads thinner, which is the real argument for growth, and lose one and it concentrates fast.
Break-even is labor cost per billable hour plus overhead per billable hour. It is a floor, not a price. Bill at it and the year nets zero; bill under it and every invoiced hour is funded by something else. The rate you charge is that floor divided by one minus your target margin:
Rate = break-even / (1 - target margin). Not break-even × (1 + markup). Adding 15% to a $110 break-even gives $126.50, which is a 13% margin, not 15%. Dividing by 0.85 gives $129.41, which is the rate that actually returns 15%. The gap looks small on one hour and is not small across 4,000 of them.
This is the same arithmetic the profit margin calculator applies at the job level. If you price by the hour, set the rate here first, then use that rate as the labor line when you cost a whole job.
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Add burdened labor cost per billable hour to overhead per billable hour, then divide by one minus your target net margin. Labor cost per billable hour is the fully loaded wage divided by utilization, because you only invoice part of every paid hour. Dividing by one minus the margin is what puts profit on revenue instead of adding it to cost.
A full-time technician is paid about 2,080 hours, which is 40 hours across 52 weeks. Published field service figures put the average field technician at 58% to 65% of working hours billed, roughly 1,200 to 1,350 hours. Drive time, quoting, callbacks, paperwork, training and paid time off account for the rest.
Published benchmarks treat 60% to 80% as strong. Many HVAC and field service companies target 65% to 85%, and 70% to 80% is a strong target for field technicians in a well-run shop. Independent contractors typically bill 60% to 70% of their working hours.
Two multipliers. Burden adds 30% to 60% to the wage. Utilization then divides that loaded wage by the share of the day you actually invoice, so at 65% utilization a $43 burdened cost is really $66 per billable hour. Overhead and profit sit on top of that, which is how a $32 wage becomes a three-figure rate without anyone being greedy.
No. Adding 20% to cost is a 20% markup and produces a 16.7% margin. To earn a 20% margin you divide cost by 0.80, which is a 25% markup. It is the most common pricing error in the trades and it repeats on every hour you sell.
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Where the benchmarks come from
Utilization benchmarks of 60 to 80%, field service targets of 65 to 85%, and the 58 to 65% average share of working hours billed by field technicians are drawn from published field service industry reporting. The 60 to 70% billable share for independent contractors, the 30 to 60% labor burden range, the 7 to 15% workers compensation figure for high-risk trades and the observation that a $25 wage costs $40 to $55 fully burdened come from published 2026 contractor and field service sources. The rate formulas are arithmetic, not estimates. This tool does not use or publish any client data. Last reviewed 2026.