Construction Financials

Hourly Rate Calculator

Determine your hourly rate as a general contractor

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This Construction Hourly Rate Calculator is designed to help general contractors, subcontractors, or any specialty contractor in construction accurately calculate their hourly rate based on an annual target income after expenses and taxes.

What is the average hourly rate of a general contractor? 

The average hourly rate of a general contractor varies depending on the region of the country in which they are working, their level of experience, and the type of work that they are doing. However, on average, general contractors typically charge between $75 and $125 per hour for their services.

What are the typical business expenses of a general contractor? 

There are many business expenses that any independent contractor in construction can incur. Some of the most common ones include:

  • Vehicle expenses (gas, maintenance, repairs, etc.)
  • Equipment rental, upkeep, and purchases
  • Insurance (health, general liability, vehicle, etc.)
  • Licensing and permits
  • Advertising and marketing
  • Legal and accounting fees
  • Telephone and internet fees
  • Office supplies
  • Construction software

How does a general contractor determine their hourly rate? 

A contractor determines their hourly rate based on a number of factors, including their cost of living, overhead costs, taxes, level of experience, and/or the speciality of their trade.

As a general contractor, the steps for calculating your hourly rate are as follows:

  1. Determine a target income (TI): What do you want or need to make per year after taxes and expenses to cover your lifestyle and cost of living? 
  2. Determine your total billable hours (BH): How much time will you'll need for vacations and holidays? How much time do you spend on non-billable activities (i.e. driving between jobs, estimating projects, etc.)
  3. Determine your monthly overhead (O): How much does it cost to run your business each month? 
  4. Determine what taxes you'll need to pay (T): What is your tax rate, and which taxes will you be required to pay? 

Once you've determined these four things, you calculate what you need to charge per hour by using the following formula: 

TI / (BH * 1 - T) + O / BH = Hourly Rate

For example, we'll calculate an hourly rate using the following numbers:

Target income per month: $10,417
Billable Hours per month: 147
Monthly overhead: 1610
Taxes: 25%

Using these numbers, our formula would be:

10,417 / (147 * (1-.25)) + 1,610 / 147, or when simplified down, 94.49 + 10.95.

After rounding, we arrive at an hourly rate of $106 per hour.