Guide
Most solo contractors price their rate off a 2,080-hour year. Here's the deduction cascade that shows your actual billable hours are closer to 1,100-1,350, and what that does to the rate you need to charge.
Take 52 weeks at 40 hours and you get 2,080 hours a year. That number shows up in every generic rate calculator and it is wrong for almost every solo contractor. It assumes every hour you're at work is an hour you're billing a client. If you run your own van, quote your own jobs, chase your own invoices and drive to every site, that assumption falls apart fast.
The gap between hours worked and hours billed is the single biggest reason contractors underprice themselves. Not because they can't do the maths, but because they never actually ran it.
Start at 2,080 and subtract everything that isn't client-facing, tool-in-hand work. Here's a realistic breakdown for a one-person operation running its own admin:
| Deduction | Hours/year | Running total |
|---|---|---|
| Starting point (52 weeks x 40h) | - | 2,080 |
| Holidays, bank holidays, sick days | -120 | 1,960 |
| Quoting, estimating, site visits | -250 | 1,710 |
| Admin, invoicing, chasing payment | -200 | 1,510 |
| Supply runs, van maintenance, kit sorting | -150 | 1,360 |
| Unpaid drive time between jobs | -250 | 1,110 |
That lands at 1,110 billable hours in this example. Depending on your trade, how far apart your jobs are, and how tight your admin systems are, the realistic range across most solo operators is 1,100 to 1,350 hours a year. That's a utilisation rate of roughly 55-65% of the 2,080-hour baseline. A tidy operator with good scheduling and simple invoicing might land near the top of that range. Someone doing a lot of driving in a rural patch, or still quoting on paper, will sit nearer the bottom.
It's worth being blunt about categories here, because contractors often blur them when they set a rate:
The second category is the trap. It feels like work, and it is work, but no client is paying you for it directly. It has to be paid for by the rate you charge on the hours that are billable.
If you set your hourly rate by dividing your income target by 2,080 hours, you are dividing by a number that's roughly double your real billable capacity. That doesn't make your rate slightly low. It makes it dramatically low, because every non-billable hour still has to be paid for out of the hours you do bill.
Run the same target income through 2,080 hours versus 1,200 real billable hours and the required rate is not 10% or 20% different. It's closer to 40% different. That's the size of the hole in most solo contractors' pricing.
The fix is one formula:
Required hourly rate = (target owner income + annual business overhead) / realistic billable hours
Target owner income is what you want to pay yourself before tax, not your business's total revenue. Annual overhead covers van costs, insurance, tools, software, marketing, licensing and everything else that keeps the business running whether or not you're on a job. If you haven't pinned that number down, a break-even calculator will get you there quickly using your actual fixed and variable costs.
Say you want to pay yourself $75,000 a year, and your annual overhead (van, insurance, tools, software, phone, marketing) runs to $35,000.
The naive rate understates what you actually need by about 42%. Charge $53 an hour based on the 2,080-hour assumption and you will not hit $75,000 in take-home pay, no matter how many hours you put in. You will simply work harder for less, because the non-billable hours were never priced in.
Using the same $35,000 overhead and a 1,200-hour billable year, here's how the required rate scales with what you want to take home:
| Target owner income | + Overhead | Total needed | Required rate (1,200h) |
|---|---|---|---|
| $50,000 | $35,000 | $85,000 | $70.83 |
| $75,000 | $35,000 | $110,000 | $91.67 |
| $100,000 | $35,000 | $135,000 | $112.50 |
| $125,000 | $35,000 | $160,000 | $133.33 |
| $150,000 | $35,000 | $185,000 | $154.17 |
Adjust the overhead figure for your own business and the required rate moves with it. If you'd rather not do this by hand each time, the hourly rate calculator runs this exact formula against your own numbers.
You can't get to 2,080 billable hours and you shouldn't try, but you can push your real number from 1,100 towards 1,350 by cutting the non-billable categories rather than the billable ones:
A simple set of templates and checklists for quoting, invoicing and job scheduling does more for your effective rate than almost any pricing trick. The small business operations kit covers the systems side of this if you want to tighten it up.
Your billable year is not 2,080 hours. For most solo contractors it's 1,100 to 1,350, depending on how much driving, quoting and admin you carry alone. Price your rate off the real number, not the fantasy one, or you'll be working full weeks and still falling short of the income you set out to earn.
The Small Business Operations Kit ($19) turns guides like this one into fill-in-once worksheets: rate card, quoting sheet, job costing, payment terms and follow-up templates. Built by the same people who write these guides.