Many tradespeople price their hourly rate by gut feeling or by looking at competitors. That often means vacation, sick days and operating costs aren't fully priced in – so less is left over at year's end than planned.
Formula: Hourly rate = (desired income + operating costs + vehicle costs + tool costs) ÷ billable hours per year
Billable hours come from the working days in a year minus vacation, public holidays and estimated sick days, multiplied by the hours per day you actually bill the customer (not total time on site).
Example calculation
| Item | Amount |
|---|---|
| Desired income (year) | €36,000 |
| Operating costs (year) | €3,000 |
| Vehicle costs (year) | €5,500 |
| Tool costs (year) | €1,000 |
| Total costs | €45,500 |
With 220 working days, 26 vacation days, 10 public holidays, 10 sick days and 6 billable hours per day, that's 174 working days × 6 hours = 1,044 billable hours per year.
Required hourly rate: €45,500 ÷ 1,044 hours = €43.58/hour.
