Effective hourly rate calculator

Your effective hourly rate is what the business actually made per hour last month, and it is almost never the rate on the invoice.

What your effective hourly rate actually is

Take everything that came in last month and divide it by every hour anybody worked. Not the billable hours. All of them. Drive time, the parts run, the twenty minutes on the phone with a supplier, the Saturday you spent quoting.

That number is your effective hourly rate, and for most shops it lands well under the rate on the invoice. The rate you charge and the rate you make are two different numbers, and only one of them pays you.

Most owners have never run it. Not because it is hard. Because the hours live in your head and the revenue lives somewhere else, and nothing ever puts them in the same box.

Overhead per hour, and why it comes first

Your overhead divided by those same hours is your overhead per hour. Rent, insurance, the phone, the software, the truck payment. Everything that bills you whether or not the truck moves.

That figure is not your break-even. A real break-even also has to carry labor and materials, and those move job to job, so no calculator can hand you one off six numbers. What overhead per hour gives you is the floor under the floor: money leaving every hour before a single hand is paid or a single part is bought. Anyone selling you a two-input break-even number is selling you a number that cannot be true. The SBA walks through the same arithmetic in its guide to calculating what a business costs to run, which is worth reading once even if you have been in business ten years.

What counts as overhead trips people up. The working rule: if it bills you in a month you took no jobs, it is overhead. The IRS draws the line for tax purposes in its page on deducting business expenses, and that is the line to use, because it is the one you already file against.

What one missed call a week is worth

Average ticket, times the share of quotes you win, times fifty-two. That is what a single unanswered call per week costs you across a year.

The unpleasant part is that it never shows up anywhere. There is no receipt for a job you did not get. It does not hit the bank statement, it does not appear in the software, and it never comes up when you sit down to cut expenses.

You do not have to guess at how many you miss, either. Google Business Profile logs the calls placed from your listing and marks the ones that went unanswered, so there is a real count sitting in an account you already own.

Getting at any of these numbers is a bookkeeping problem before it is a marketing one. If the hours and the revenue live in two different places, nobody is ever going to divide one by the other. The SBA's page on managing your finances covers the boring half, and the boring half is what makes this check take four minutes instead of an afternoon.

A homeowner with water coming through a ceiling does not leave a voicemail and wait. They dial the next name on the list. Whoever answers gets the job.

What the Real Rate Check measures

Six numbers off last month and eight questions about how the shop runs. Out of that comes your effective hourly rate, your overhead per hour, your average ticket, your close rate, your overhead per job, your ad cost per job, and what the phone is costing you.

Then eight checks in three groups: the money, winning the work, and getting found. You get a score for each group, not just one number at the top, because a shop losing four points on the phone and nothing on the money has a different week ahead of it than one losing four on the money. Every bar is printed next to the check it belongs to, so you can look at one and decide it is wrong. The bars are mine, set from the shops I work with. They are not an industry average and I am not going to call them one.

It takes about four minutes and the results are on the screen the second you finish. If you would rather start somewhere shorter, the six-question Revenue Leak Score is the quicker version. If you want the website and the follow-up built and run for you afterward, that is $297 a month, flat.