Question 1

How do I calculate my hourly rate as a contractor?

Accepted Answer

Start with the technician wage, add labor burden (payroll taxes, workers comp, benefits, typically 25 to 40 percent), add overhead recovery (total monthly overhead divided by monthly billable hours), and then divide by one minus your target margin. A $28 wage commonly supports a $95 to $140 bill rate once the math is honest.

Question 2

What margin should a home services company target?

Accepted Answer

Well-run trades target 15 to 25 percent net margin, and the best flat-rate operations exceed that on service work. Under 10 percent means one callback, one material surprise, or one slow week erases the job's profit.

Question 3

Should I mark up materials?

Accepted Answer

Yes. Sourcing, stocking, delivery, warranty exposure, and returns all cost real money. Trade practice runs 25 to 100 percent depending on ticket size, with smaller parts carrying higher markups.

Question 4

Why is my rate so much higher than my wage?

Accepted Answer

Because the customer's hour pays for far more than the technician's hour: burden, the truck, insurance, the office, marketing, unbillable drive time, and profit. A bill rate of three to four times the wage is normal and necessary, not padding.

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