Technician billable hourly rate calculator: what one technician hour must sell for
A technician paid $29.33 an hour has to bill roughly $87 an hour for the shop to clear a 10% margin, in the HVAC example below. The gap is payroll burden, overhead, and the hours a technician is paid but cannot charge for. This calculator builds the rate from those pieces and shows how sharply it moves when utilization slips.
Defaults are starting points, not your numbers. Wages are national medians from the Bureau of Labor Statistics. Overhead ($100,000 across 5 technicians) and time off come from a published vendor worked example, not a survey, and no trade-specific electrical utilization figure was found, so electrical uses the HVAC figure as a placeholder. Replace every field with your own books.
Who this is for
Owner-operators and office managers at HVAC, plumbing and electrical service businesses who pay technicians on W-2 and need an hourly labor rate for T&M billing or as the labor input to a flat-rate pricebook.
It is not for 1099 subcontractors (see the subcontractor vs employee cost calculator), for jobs priced only on materials, or for prevailing-wage work where the wage is set by the contract. Materials and overtime premium are not modeled.
What you will enter
- Base hourly wage (Wbase)
- What the technician earns per paid hour before taxes and benefits. Use a blended average if you mix apprentices and journeymen.
- Payroll burden (Lpayroll)
- Employer payroll taxes, workers' comp, health insurance and retirement, as a percent of wages. Paid time off is handled separately.
- Paid hours per year (Hpaid)
- Hours you pay for, usually 2,080 for a full-time technician.
- Paid time off and holidays
- Hours paid but not worked. Subtracting them from paid hours gives available hours (Havailable).
- Utilization (Eutilization)
- Share of available hours you can actually charge to customers. Drive time you do not bill, shop time, callbacks and idle gaps are the difference.
- Annual overhead (Oannual) and technicians (Utechs)
- Everything you spend that is not technician pay: trucks, insurance, rent, software, marketing, office and dispatch staff. Divided evenly across your technicians.
- Target net margin (Mtarget)
- Profit you want as a share of the price you charge.
Calculate your billable rate
Estimates only, for informational purposes. This is not professional financial, legal or tax advice. Wages, burden and overhead vary by market and business; confirm every figure against your own payroll and books.
Why utilization moves the rate more than anything else
Wages and overhead are paid whether or not a technician is on a billable job, so the whole cost is divided by billable hours only. Lower the billable share and every dollar of cost lands on fewer hours. The effect is proportional: dropping from 65% to 55% utilization multiplies the rate by 65/55, an 18% increase, on the HVAC defaults ($87.32 to $103.20). A 10-point gain works the other way, cutting the rate needed for the same margin. A raise in wages of 10% would move the rate far less, because wages are only part of the cost.
The table recalculates for your inputs at each utilization level.
| Utilization | Billable hours per tech | Break-even rate | Rate at your margin | vs your input |
|---|
Worked example: one shop, three trades
Each column below uses the trade's default wage and utilization with the same shop: 5 technicians, $100,000 overhead, 136 hours of paid time off, 30% burden and a 10% margin. Only wage and utilization differ, so the table isolates how much each trade's inputs matter. Step by step for HVAC: $29.33 × 1.30 × 2,080 hours = $79,308 in loaded wages; plus $20,000 overhead per technician = $99,308; divided by 1,263.6 billable hours (1,944 available × 65%) = $78.59 break-even; divided by 0.90 = $87.32.
The shared $100,000 overhead is low for many shops with trucks, office staff and marketing. Higher overhead raises every rate in this table; enter your own above.
Methodology and sources
R_billable = [ W_base × H_paid × (1 + L_payroll) + O_annual / U_techs ]
/ [ (H_paid − H_pto) × E_utilization ] × 1 / (1 − M_target)
Loaded wages and each technician's share of overhead are added, divided by billable hours, then grossed up so that margin is a share of price. Wage is entered per hour, so it is multiplied by paid hours to match the annual overhead figure.
Where each default comes from, all checked September 20, 2026:
- Wages: BLS median annual wages, May 2025, divided by 2,080 hours: HVAC $61,010, plumbers, pipefitters and steamfitters $63,800 (BLS groups the three), electricians $63,190. These exclude overtime and benefits.
- Burden, 30%: BLS Employer Costs for Employee Compensation, June 2026. For installation, maintenance and repair workers, insurance ($4.27), retirement ($2.15) and legally required benefits ($3.81, which include payroll taxes and workers' comp) come to $10.23 on $33.61 of wages, or 30.4%. Construction industry workers work out to 29.6%. Paid leave and supplemental pay are left out because time off is modeled in the hours. A trade-bookkeeping source puts burden at 30% to 40%, so 30% is the low end. Workers' comp varies by trade and state; BLS has said it will stop including it in ECEC from the December 2026 data. Employer payroll taxes are 7.65% FICA (Social Security wage base $184,500 in 2026) plus FUTA on the first $7,000 and state unemployment: Paychex, California EDD.
- Utilization: HVAC 65%, from a Field Promax study of 300 HVAC companies (5.7 billable of 8.8 paid hours a day), reported by ACHR News. Simpro gives 55% to 60% as the plumbing average and 75% or more as a target, though the same article also says average firms reach 60% to 70%; 60% is used. FieldEdge calls 70% to 85% healthy and ServiceTitan calls 60% to 80% strong. No trade-specific electrical measurement was found.
- Time off and overhead example: 10 vacation days plus 7 holidays (136 hours, leaving 1,944 available) and $100,000 overhead for 5 technicians, from the ServiceTitan labor rate calculator and Housecall Pro. These are illustrations.
- Margin, 10%: median HVAC and plumbing net margin is about 5.7% to 5.8% (ACCA 2024 via Contractor In Charge, IRS data via VantaInsights); the same sources call 8% to 12% healthy. These are secondary sources.
Definitions differ. ServiceTitan's and Housecall Pro's own labor-rate calculators use a "billable efficiency" of 30% to 50%, a much lower figure than the 65% measured above, so do not mix numbers between tools without checking what each one counts.
Frequently asked questions
Why is my required billable rate so much higher than the technician's wage?
The wage is only one input. Payroll taxes, insurance and benefits add roughly 30% on top of it, overhead has to be recovered somewhere, and the technician bills only part of the hours you pay for. All of that cost is divided across the billable hours, then a margin is added.
Should overhead be spread over paid hours or billable hours?
Billable hours. Overhead is paid for every hour, but only billable hours bring in revenue, so spreading it over paid hours understates the rate you need.
Why divide by (1 minus margin) instead of adding a percentage?
A 10% net margin means profit is 10% of the price you charge. Adding 10% to cost gives a margin of only about 9.1% of price. Dividing cost by 0.90 gives a true 10% margin.
What utilization should I enter?
Use your own number if you track it: billable hours divided by paid hours worked, excluding time off. Published figures for HVAC sit around 65%, and healthy targets are often quoted between 65% and 85%. Different tools define utilization differently, so check the definition before comparing.
Does the rate include materials, overtime or vehicles?
Materials are not included; price them separately. Overtime premium is not modeled, so raise the wage input to a blended average if it is significant. Vehicles, tools, insurance, rent and office staff belong in overhead.