How do I figure out my hourly rate for HVAC, plumbing, or electrical work?
Short answer
Add up truck cost, tech pay burdened, and overhead per billable hour, then add your target profit. Most owner-operators are underpriced because they never actually run this math.
Most owners price off feel, not cost
Ask an owner what their hourly rate is and most will tell you a number they heard somewhere or copied from a competitor's truck. Ask them to show the math behind it and most can't. That gap is why so many shops are busy and still broke.
The fix isn't complicated, it's just tedious. You need your fully burdened labor cost, your truck cost per day, your monthly overhead, and a realistic billable hour ratio. Run those four numbers and the rate falls out.
Billable hour ratio is the number that surprises owners
A tech who works an 8-hour day is not billable for 8 hours. Drive time, parts runs, paperwork, and slow days eat into it. Most residential service trades run 55 to 70 percent billable. If you price as if every hour is billable, you will chronically underprice.
Once you know your real billable ratio, you divide your total daily cost by billable hours, not scheduled hours, to get your true hourly rate. This single change fixes more underpricing than any competitor analysis.
Worked example: building the hourly rate
| Tech wage + burden (taxes, workers comp, insurance) | $32/hr |
|---|---|
| Truck cost per day (payment, fuel, insurance, maintenance) | $95/day |
| Overhead per tech per day (office, tools, admin, marketing) | $180/day |
| Scheduled hours per day | 8 |
| Billable hour ratio5 billable hours of 8 | 62% |
| Total daily cost$32x8 + $95 + $180 | $531 |
| Cost per billable hour$531 / 5 | $106 |
| Rate with 40% margin$106 / (1 - 0.40) | $177/hr |
The math: Total daily cost (labor + truck + overhead) divided by billable hours (not scheduled hours) gives cost per billable hour. Divide that by (1 minus target margin) to get your sell rate.
Where owners get this wrong
- Dividing cost by scheduled hours instead of billable hours, which understates the real rate by 30 to 40 percent.
- Forgetting truck cost entirely because 'we already own the truck.'
- Never revisiting the rate after a raise, a fuel spike, or a new insurance renewal.
Ask your version of this question
This is one business owner-tested take. Your shop size, trade, and team change the answer. Ask the exact version inside Ask a Shop Owner and get a response grounded in how owners like you actually handled it.
Now run it against your numbers.
This answer is written for shops in general. Inside Ask a Shop Owner it becomes your answer: your revenue, your crew, your market, your history. Ask "How do I figure out my hourly rate for HVAC, plumbing, or electrical work" and get the version that accounts for what you already told us.
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