Free Contractor Tool
Billable Hours Calculator
Your shop rate is not what you earn. This works out how many hours you actually bill, what your effective rate really is once non-billable time is counted, and what you would need to charge to hit your revenue target.
Built by SubcontractorHub — the software contractors use to quote, finance, and run every job.
Book a Demo
Calculate Your Billable Hours & Effective Rate
Drag the utilization slider to see how sharply it moves revenue. For most shops it is a bigger lever than a price increase — and invisible to the customer.
Include yourself if you work in the field.
Share of paid time spent on work a customer pays for.
Billable hours / yr
1,258
of 1,936 paid
Revenue at your rate
$151,008
at $120/hr billed
Effective hourly rate
$78
per paid hour
Rate to hit target
$159
per billable hour
You are $48,992 short of the target. Close it by raising the rate to $159, or by lifting utilization.
Raising utilization 10 points — 65% to 75% — is worth about $23,232 a year at your current rate, and no customer sees a price change.
Reading the result: 678 paid hours a year are non-billable at this utilization. That is the drive time, quoting, callbacks, and admin your shop rate has to absorb — and the reason effective rate, not shop rate, is the number to price against.
Typical Utilization Rates by Shop Structure
Utilization tracks who absorbs the non-billable work more than how hard anyone is working.
Shop rate vs. effective rate
Shop rate is what goes on the invoice. Effective rate is total revenue divided by every paid hour, billable or not. Charge $120 an hour at 60% utilization and your effective rate is $72 — and $72 is what actually has to cover wages, overhead, and profit.
Contractors who price off shop rate without accounting for utilization underprice consistently. The unbilled 40% of payroll does not disappear; it comes out of margin.
Utilization beats a price increase
Moving utilization from 55% to 70% has the same revenue effect as raising prices 27% — except no customer sees it and no job is lost to a competitor on price.
The levers are unglamorous: tighter routing to cut windshield time, prebooking maintenance so the schedule is not rebuilt every morning, quoting from the truck instead of at the kitchen table that night, and tracking estimate hours against close rate so unpaid quoting stops silently expanding.
From Spreadsheet Math to One Platform
SubcontractorHub is where contractors run the sales side of the business these numbers describe — leads, quotes, embedded financing, and the job pipeline in one place, so close rate and margin stop living in a spreadsheet. This tool is free to use; the platform is here if you want a closer look.
Most of the non-billable time this calculator exposes is scheduling churn, quoting, and paperwork — exactly the work software removes. See scheduling software, estimating software, and the labor burden calculator to turn these hours into a real hourly rate.
Common Questions About Billable Hours
How do you calculate billable hours?
Take working weeks per year (52 minus vacation and holidays), multiply by hours per week for total paid hours, then multiply by your utilization rate. A tech paid 40 hours a week for 48 weeks has 1,920 paid hours, but at 65% utilization only about 1,250 are billable.
What is a good utilization rate for contractors?
For field techs in a well-run shop, 70–80% is a strong target. Solo owner-operators typically run 45–60% because sales, estimating, invoicing, and admin all land on one person. Small crews where the owner sells tend to see 60–70% for field staff. Under 50% for a dedicated field tech usually signals a scheduling or routing problem, not a work-volume problem.
What is the difference between shop rate and effective hourly rate?
Shop rate is what you invoice. Effective rate is total revenue divided by all paid hours, billable and non-billable. Charge $120/hr but bill only 60% of paid time and your effective rate is $72 — and that is the figure that must cover wages, overhead, and profit. Pricing off shop rate without accounting for utilization means quietly funding 40% of payroll out of margin.
What hourly rate do I need to charge to hit my revenue target?
Divide the target by billable hours, not paid hours. A solo contractor wanting $200,000 with 1,250 billable hours needs $160/hr. The same target against 1,920 hours would suggest $104 — that gap is why utilization belongs in every pricing conversation. Lifting utilization from 55% to 70% matches a 27% rate increase, invisibly.
Should I bill for drive time and estimates?
You have to recover both somehow. Many service contractors charge a flat trip or dispatch fee of $50–$150, converting drive time into revenue; others build it into the rate. Free estimates are a real cost — at two hours each and a 33% close rate, every won job carries six unpaid estimating hours. Track it, because it is often the largest block of non-billable time in a small shop.
How many billable hours are in a year?
40 hours across 52 weeks is 2,080 paid hours, but nobody bills that. Less two weeks vacation and about eight holidays leaves roughly 1,920 paid hours. Apply utilization for the working number: about 1,340 billable at 70%, 1,150 at 60%, 960 at 50%. Price against the utilization-adjusted figure, never the 2,080.
Quote, Finance, and Run Every Job in One Platform
SubcontractorHub helps contractors turn field measurements into accurate proposals, present financing, and close jobs on-site — built for the way contractor sales actually works.
Book a Free DemoResults are planning estimates based on the hours, utilization, and rates you enter. Utilization benchmarks are typical industry ranges and vary considerably by trade, market, and season. This tool does not account for material margin, subcontracted work, or taxes — use it alongside overhead and labor burden figures when setting pricing.