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Pricing 101

Building a Billing Rate

Labor + equipment + overhead + profit.

Stage 2 · Control4 min readBuilds on Equipment Cost per Hour Completed

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
Cost to deliver the hour: $55 (break-even)Profit: 15.4% of the rate

The building blocks, one layer at a time

Building blockHow it's figuredPer hour
$

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 %) = Rate

Build your billing rate

Enter your own wage, burden, yearly fleet and overhead costs and billable hours. The rate builds up layer by layer.

Loaded labor
Equipment & fleet
Overhead
Break-even rateLabor + equipment + overhead
Profit per hour
Billing rate

Key idea: A billing rate is built from your own costs, not copied from a competitor. Know your break-even, then add profit.

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