Contractor Hourly Rate Calculator

Pricing Strategies for Contractors

Setting the right hourly rate is one of the most important business decisions a contractor makes. Charge too little and you will work hard but never build wealth. Charge too much and you will lose bids to competitors. The key is understanding your true costs and building a rate that covers everything while remaining competitive.

Understanding Labor Burden

Labor burden is the “hidden cost” of employment that many new contractors overlook. Beyond base wages, employers pay FICA (7.65%), federal and state unemployment taxes, workers compensation insurance, and often health insurance and other benefits. These costs typically add 25-40% on top of base wages. A journeyman earning $30/hour may cost $39-$42/hour when fully burdened.

Overhead Allocation

Overhead costs must be spread across your billable hours. If your annual overhead is $60,000 and you bill 1,500 hours per year, each billable hour must carry $40 of overhead. This is why tracking both overhead expenses and billable utilization rate is critical for profitability.

Exam Relevance

The Florida General Contractor exam tests your understanding of labor costs, burden rates, and pricing under the Business & Financial Management section. Questions may require calculating the fully-loaded hourly cost of a worker, determining overhead allocation per project, or computing the break-even billing rate for a contracting business.