Corbelworks · Field Tools

FAQ — Job Profitability & Break-Even Calculator

Real answers to the numbers questions contractors actually ask — break-even rates, margin, markup, utilization, and target profit.

Updated August 2026 · 6 questions

Frequently Asked Questions

What is a break-even billable rate?

A break-even billable rate is the hourly rate that covers all costs — wages, labor burden, overhead, and non-billable time — with zero profit left over. It is the floor: anything below this rate loses money.

Example: $28/hr wage, 30% burden, 65% utilization, $120k/year overhead for 3 employees. Fully burdened wage is $36.40/hr. At 65% utilization, each billable hour must carry 1.54 hours of paid labor — labor cost per billable hour is $56. Overhead spread across ~3,800 billable hours adds ~$32/hr. Break-even ≈ $88/hr.

If you bill $75, you lose $13 per hour. If you bill $95, you profit $7 per hour. The calculator runs this math so you do not have to guess.

How is margin different from markup?

Margin is profit divided by price. Markup is profit divided by cost. They are not the same, and confusing them is the most common pricing mistake in the trades.

If your cost is $80 and you want a 20% margin, your price must be $100 — not $96. Formula: price = cost / (1 − margin). So $80 / (1 − 0.20) = $100.

If you instead add 20% markup to $80, you get $96 — and your actual margin is only $16 / $96 = 16.7%. To achieve 20% margin you need 25% markup. Always price from margin, not markup.

What's a good billable utilization rate?

Most trades businesses run 55–75% billable utilization. The rest is drive time, quoting, admin, callbacks, shop maintenance, and weather delays. If you are at 55%, your billable rate must carry 45% non-billable time.

$28/hr wage at 55% utilization with 30% burden = $36.40/hr fully burdened. At 55% util, each billable hour carries 1.82 hours of paid labor. Labor cost per billable hour = $66. Before any overhead, you are already at $66/hr just in labor.
How do I calculate labor burden?

Labor burden is the cost of employing someone beyond their base wage. It includes FICA (7.65%), FUTA and SUTA, workers' compensation insurance, health insurance, retirement contributions, paid time off, and other benefits. Trades commonly run 25–40% burden.

$28/hr wage × 1.30 burden factor = $36.40/hr fully burdened per paid hour. Workers' comp alone can be 8–20% of wages depending on trade classification — roofers pay more than electricians.

To calculate: add up all annual employer-side costs for one employee, divide by their annual wages, and add 1.0 to get your multiplier.

Should I include myself in overhead or as a field employee?

If you turn wrenches on jobs, that time is field labor and should be billed at your billable rate. If you only manage, estimate, and run the business, you are overhead. Many owners do both.

Split your time proportionally: if you spend 60% of your week on billable field work and 40% managing, then 60% of your cost goes to field labor and 40% to overhead. Do not hide all your cost in overhead — it inflates your break-even rate and makes you uncompetitive. Conversely, do not bill yourself at $35/hr when your true cost is $65/hr; you are subsidizing jobs without knowing it.

What net profit margin should a contractor target?

10–25% net profit margin is typical for healthy trades businesses. Under 10% means one bad job or one callback-heavy month can wipe out an entire year of profit. Over 25% is excellent but you should verify your utilization assumption is realistic — if you assumed 85% and you are actually at 60%, your margin is a fiction.

The healthiest contractors target 15% as a floor and 20% as a goal. If you are consistently under 10%, raise rates, improve utilization, or cut overhead. Do not assume volume will fix it.