Margin Drivers AcademyModule 3 · Estimate every jobLesson 8 of 22
Pricing 101
Building a Billing Rate
Labor + equipment + overhead + profit.
Your billing rate is what you charge for one man-hour of work. It is built in layers from your own costs: the worker, the equipment, the overhead, and then the profit on top.
What's inside a $65 billing rate
Example company · per billable man-hour- Labor $30
- Equip. $8
- Overhead $17
- Profit $10
The building blocks, one layer at a time
Loaded Labor
The worker's true hourly cost.
$25 wage + 20% labor burden (see “The True Cost of a Labor Hour”)
$30.00
Equipment & Fleet
Trucks, trailers and mowers that crew uses.
$240,000 yearly fleet cost ÷ 30,000 billable hours
$8.00
Overhead
Office, admin salaries, rent, insurance and more.
$510,000 yearly overhead ÷ 30,000 billable hours
$17.00
Break-Even Rate
Charge less and you lose money every hour.
$30 + $8 + $17
$55.00
Profit
What the business earns for its risk.
$55 ÷ (1 − 15% target margin) = $64.71, rounded to $65
$10.00
Billing Rate
What you charge per man-hour.
A 3-person crew bills $195 per crew-hour
$65.00
Three things to know
Where 30,000 hours comes from
15 field employees × 2,000 billable hours a year. Count only hours you can bill, not every hour you pay.
Charging $50 instead?
That's $5 under break-even on every hour:
−$150,000
a year, even with every crew busy.
Materials & subs go on top
This rate covers labor, equipment, overhead and profit. Price materials and subcontractors separately, using your target margin.
Your numbers
Labor + Equip. + Overhead ÷ (1 − margin %) = RateBuild your billing rate
Enter your own wage, burden, yearly fleet and overhead costs and billable hours. The rate builds up layer by layer.
Margin Drivers calculator · Go further
Price increase lab
How many customers you can lose and still come out ahead with a price increase.
Open the price increase lab