What's Your Time Worth? How to Determine Your Hourly Rate (2022)

Last updated: August 31, 2021

How much should you charge per hour as a handyman?

There is a right answer, and in this pricing guide, I’m going to show you exactly how to figure that out. And by the way, this same process will help you whether you provide handyman services, carpentry, or any other service.

But first, let’s address a big issue –handyman hourly rates are all over the place. Some demand well over $100 per hour because they know what they’re doing and do it efficiently, professionally, and immaculately. Then, there are other people charging a measly $10 per hour under the table.

What's Your Time Worth? How to Determine Your Hourly Rate (1)

So, where do you fit in on this scale? What’s a good rate to base your service pricing on as a self-employed handyman or contractor?

That’s what I will answer in this article. I’m going to lay out a step-by-step process you can follow to help nail down a rate that will keep your business profitable and your schedule full.

Whether you are charging by the hour, quoting each job in person, or have flat-rate pricing for common services, follow these steps to price for success.

Contents:

  • How to determine your hourly rate
    • Step 1: Calculate your cost of living
    • Step 2: Estimate your business expenses
    • Step 3: Estimate taxes
    • Step 4: How much will you work?
    • Step 5: Calculate a profitable rate
    • Step 7: Evaluate
  • What is the average hourly rate for a handyman?
  • Why do handyman hourly rates vary so much?
  • Bonus: How to boost profits and make a six-figure income

How to Determine Your Hourly Rate

The primary purpose of a business is to generate a profit and sustain your lifestyle. You must charge enough to do those two things. Otherwise, your business is NOT sustainable. I don’t care how cheap the competition is.

If you don’t charge enough, you’ll either kill yourself working too many hours, or you won’t make enough money. Then your business will fail, and you’ll be forced to get another job.

So, the only real rule for setting your rates is to charge enough to stay in business and pay personal bills at a minimum. This is called Cost-Based Pricing,and it’s simply a way to guarantee that you make a decent profit.

What's Your Time Worth? How to Determine Your Hourly Rate (2)

Basically, we will use Cost-Based Pricing to determine the minimum you must charge to cover business and lifestyle expenses.

Can you charge more than that? Of course you can, and I recommend that you do!

(Video) How To Calculate Your Hourly Pay - Calculate Dollars Per Hour And Know How Much Your Time Is Worth

But this is the first step regardless of how much you charge, so let’s get started.

Step #1 – Calculate Your Cost of Living

How much does it cost for you to live comfortably and happy?

Write down a list of all of your expenses and an approximate monthly total for each. Spend time and try to think of all of your expenses, even the ones you only pay once a year, like vehicle registration, for example. Assign a monthly value to each and add them into an Excel spreadsheet (or write them down).

Make sure not to leave anything out. Include entertainment and even a little extra for unexpected expenses. Here, the idea is to see how much it actually costs you to live your “normal” lifestyle. If saving money for retirement is part of your lifestyle, make sure and include that, too. Need to pay for insurance? You’ll definitely want to include that as well.

While there are benefits of going through this process in detail, you can simplify this step by simply taking your current or recent salary and setting that as your cost of living (assuming you are making enough to pay the bills.)

Step #2 – List Your Business Expenses

Next, make a list of business expenses and assign a monthly value to each expense.

Pro Tip
You can save time and make calculating your hourly rate a thousand times easier by downloading a free spreadsheet I’ve created. It includes all common handyman business expenses and does the math for you. Click here to download the Handyman Hourly Rate Calculator now (It’s free).

While listing your business expenses, make sure to include everything. Here is a list of some common handyman business expenses. You can also go here to see how much it will cost to get started.

What's Your Time Worth? How to Determine Your Hourly Rate (3)

Step #3 – Estimate Your Taxes

Now it’s time to figure out your tax responsibilities as a self-employed contractor. I’ve listed the common taxes directly below. However, this list is not all-inclusive, and you may have other tax obligations outside of these, depending on where you live. I am not a tax professional and am only providing the following information as an example. Your specific tax obligations may be different, and you may consider consulting with a professional.

Self-Employment Tax – Self-employment taxes are currently set to 15.3%, according to irs.gov. That 15.3% covers both Social Security and Medicare taxes. As an employee, these taxes were automatically taken out of your paycheck. As a self-employed handyman, you’ll have to pay these out of your gross profits, which means you need to charge enough to cover them.

Federal Income Tax – This is the same tax you paid as an employee. As you probably already know, this tax depends on how much money you make each year. The more you make, the higher the percentage of taxes you will pay (assuming you don’t have a bunch of tax deductions). To figure out your hourly rate, you will need to estimate this tax. For most handypersons, this will end up being about 15-20% of your profits after you pay self-employment taxes.

State Income Tax – Check with your state to find out if you need to pay this tax.

Other Taxes – Depending on where you live, there might be other taxes. For example, in Canada, I know they have additional taxes to cover healthcare. Most cities will also collect taxes. Although this is small, you’ll want to include this.

(Video) How To Determine Your Hourly Rate - What Are You Worth?

Once you have an estimated percentage for each tax, add them all up to get your total tax percentage.

Let’s say your taxes are as follows:

Self-employment: 15.3%
Federal Income Tax: 15.0%
State Income Tax: 0%

Total Taxes = 30.3%(example only)

Of course, there are several ways to lower your tax burden, but don’t get caught in the weeds worrying about that right now. It will just be a nice bonus for the future once your business is established.

Step #4 – Determine Your Billable Hours

The next step is to figure out how many billable hours you will work each month (assuming you have enough customers to fill your schedule).

You may be thinking that 40 hours is a good estimate. In reality, however, it is more realistic to bill between 25 and 35 hours per week with all of the quoting, following up, driving time, etc.

Sure, you might work 40 hours per week or more as a full-time handyman, but you won’t be paid for every minute of that. You are only paid for the time you are actually working for a customer.

Pro Tip
If you are starting your business part-timebut plan to go full-time eventually, base your calculations on how many hours you would work if operating full time.

The goal here is NOT to see how many hours a week you can work, but how many hours it is reasonable to work without totally consuming your life. After all, you’ve started this business to have some freedom. Enjoy that freedom and set a limit on your billable hours.

When I started my handyman business, I set my billable hours to 25 hours per week. This freed up time to improve my business, have a personal life, and run this website. I’ve based my workload on my own personal lifestyle design. I recommend you do the same.

Step #5 – Crunch the Numbers

Now that you understand your costs and reasonable working hours, you can do some quick calculations to see how much you need to charge to live the lifestyle you have designed.

Don’t want to fuss with the math?
I’ve created an hourly rate calculator to do the math for you. Justclick here to download “The Handyman Hourly Rate Calculator” (It’s Free). Simply tweak a couple of numbers and BAM, out pops a customized hourly rate for your unique situation.

If you don’t want the download the free rate calculator above, the math goes like this:

(Video) How To Calculate What Your Hourly Rate Is Worth

Total Monthly Living Expenses = L
Total Monthly Business Expenses = B
Total Billable Hours Per Month = H
Total Taxes (%) = T

Your Minimum Hourly Rate = L/[H* (1 –T)] + B/H

Example: So let’s say you need to make $5,000/month to live, expect your business expenses to be about $1,200/month, estimate your taxes at about 30%, and plan to work about 32 billable hours per week.

L = Monthly living expenses = $5,000 (about $60K per year)
B = Monthy business expenses = $1,200
H= Monthly billable hours = 128 (about 30 per week)
T = Total taxes = 30% = 0.30

Minimum Hourly Rate = $5,000/[128 *(1-.3)] + $1,200/128 = $65.18/hour

That means you’ll want to charge at least $65 per hour for your services. If you don’t, then you’ll either sacrifice the quality of your life or slowly build up debt.

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This is a great way to figure out the minimum you must charge, which is probably higher than you thought it was. But, the truth is that you’ll probably end up charging even more than this. In fact, most handymen I consult with end up making at least $100 per hour on average.

Step #6 – Evaluate and set your rates

Now you know the minimum hourly rate that you must charge to make your efforts worthwhile.

However, you’ve yet to answer the question, “how much should you charge?” And this is where you will run into the same challenge that every new service provider faces.

Will customers actually pay that amount? Or, maybe they will pay even more?

If you’re like 99% of people who start a handyman business, answering this question will be difficult and uncomfortable. You may doubt that you can charge that minimum hourly rate.

If you don’t feel comfortable charging that amount, why not? What’s holding you back? I’ve found that most handymen tend to undervalue their services and leave a lot of money on the table. Sometimes that’s because of fear, and sometimes it’s caused by other pricing mistakes that I talk about in this article.

Eventually, you will have to pick a number. Here is some more info to help you do that confidently.

(Video) Pricing Design Work & Creativity - Stop Charging Hourly

What is the average hourly rate for a handyman?

Hourly rates for handymen range from $40 to $125, with most handymen falling in the $60-$80 per hour range(Source: Thumbtack, Home Advisor, Fixr, Angi).

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According to Thumbtack, the national average for a handyman is $60 per hour, with a low end of $40 per hour and a high-end of $119 per hour.

According to Home Advisor (another huge platform for pros), the average cost to hire a handyperson is $393. Obviously, that’s not an hourly rate, but it’s still valuable information considering that people hire handymen for small projects that usually take just a few hours.

Why do handyman rates vary so drastically?

There are obvious factors to consider, such as location, the types of services provided, skill level, and how established a handyman is. For example, a new handyman who mainly provides painting services to a small town in Oklahoma will usually charge less than an established pro who offers plumbing and electrical repairs in San Francisco.

But there are other, less commonly known factors that have a big impact on handyman rates. These are things like business acumen, confidence level, or even where and how a handyman advertises.

For example, handymen that advertise on Fixr charge anywhere from $50 to $100 per hour, with most charging $65 per hour, while those advertising on Angi have rates between $60 and $125 per hour.

How to boost your income and generate a six-figure income

I didn’t know much about pricing when I started my business, and I charged just $25 per hour (a huge mistake). After a couple of years and thousands in lost profits, I eventually got to the point where I made close to $100 per hour on average while providing essentially the same services.

Many will assume I did this by improving my handyman skills or working more, but most of my gains were made by learning business skills like sales and marketing.

Here are a few key business skills that can boost your income as a pro:

  • Learn how to talk money with customers (how you present your prices matters)
  • Learn strategies for scheduling jobs more efficiently (so there is less downtime and admin work and more billable hours)
  • Learn ways to package your services to add more value to customers (allowing you to charge more for your time)

By learning these skills and strategies, you can often double or triple your profits without working more hours or hiring employees.

That may seem like a big claim, but I’ve seen it happen dozens of times with my students.

If you are serious about starting a handyman business and want to learn these skills and strategies, I recommend investing in my handyman pricing course – $100K Handyman Pricing. It will give you the strategies and the confidence you need to make more money with less effort, all while keeping your customers happy and coming back for more.

Conclusion

Setting your handyman hourly rate can be challenging since there are no “rules” regarding how much you should charge.

(Video) How to calculate your hourly rate #salary #careertips

However, by understanding your business expenses, calculating your minimum hourly rate, and then comparing that with industry averages, you gain just a bit of confidence and a starting point.

From here, I recommend you continue to seek knowledge about pricing. There are many strategies and tactics that can boost your income as a pro, and it pays to investigate them all.

Videos

1. Calculating Hourly Rates for a Contractor or Small Business
(Michael Tandarich)
2. Determine your hourly rate to understand your business and your time allocation towards tasks.
(Being Guru 2.0)
3. Why Charging By The Hour Doesn't Make Sense
(The Futur)
4. The Value of Time: How to Charge What You’re Worth - Dan Lok
(Dan Lok)
5. How to calculate your hourly rate as an entrepreneur
(Lisa Tran)
6. When Clients Don't Want To Pay What You're Worth Do This Instead
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