How to Calculate Your True Billable Hourly Rate (Free Contractor Training)

Last updated: October 23, 2026

If your prices feel right but your margins don't, this training shows you exactly why, and how to fix it. Want to skip ahead and run your own numbers? Use the free Billable Hour Calculator.

What's covered in this training

Matt Koop walks through the real math behind profitable service pricing: the numbers most contractors never run, and why that gap is costing them on every job.

• Why the hourly wage you pay your tech is never the real cost of a service call
• How to calculate your true billable hourly rate using your actual numbers
• The productivity reality most contractors overlook, and how it's quietly shrinking margins
• Why a single flat price loses jobs, and what to present instead
• How to build a rate that holds up even on a bad day

Why does a $40/hour tech actually cost $125 to $160 an hour?

A technician's true cost goes well beyond their hourly wage. Payroll taxes, benefits (medical, dental, 401k) and realistic productivity all change the math. In the training, Matt uses a tech who's billable 16 to 17 days a month, not every working day, and that gap has to be covered somewhere. Add what it costs to attract and keep a skilled technician, and in his example a $40/hour employee costs $125 to $160 per hour to put in front of a customer. Price below your real number, and every job you run is subsidized out of your own pocket.

How do you calculate your true billable hourly rate?

Your true billable hourly rate is built from four inputs:

1. Full compensation cost: what it takes to attract and keep a quality technician, not just today's wage
2. Burden: your total payroll tax and benefits cost
3. Real productivity: the hours your tech actually bills, not an ideal 8-hour day
4. Profit margin: enough to absorb a bad job without wiping out the week

Most service businesses are missing at least one of these in their pricing, which is why so many contractors stay busy and still struggle to build cash. The formula is straightforward once you run it with real numbers. The free Billable Hour Calculator does it for you, or download the spreadsheet version.

Why do menu pricing options work better than a single price?

When a customer receives one flat price, their instinct is to compare: should they call someone else, wait, or push back? Presenting multiple options shifts that dynamic. Instead of deciding whether to buy, the customer is deciding which option fits them. The lowest tier removes sticker shock, and the mid and upper tiers give customers a clear reason to spend more on their own terms. On TNFR menus, 80% of customers choose bronze, silver or gold over the cheapest option, because the structure of the presentation does the work.

See where else pricing leaks on the truck in our HVAC pricing guide, and find out what each call really costs you with the free Truck Roll Cost Calculator.