How the Am I Undercharging? Price Check works
We start with the price and take off overhead as a share of the price, then supplies, the truck and any helper pay. What's left is the job's profit before tax.
Then we set aside the share you put away for taxes. What remains is what actually lands in your pocket.
Your time is the hours on the job plus the drive there and back, because driving is work time too. Pocket money ÷ your time = your real pay per hour.
Your goal pay per hour is your yearly goal ÷ (weeks × hours per week). The fair price is the price that would pay you exactly that for this job, rounded up to the next $5.
Tips from the trade
- Count every hour you work, including quoting, texting customers and buying supplies. If those take 10 hours a week, your real rate is lower than it looks.
- Raise prices on new customers first. Then move existing customers up with a polite letter and some notice.
- If one type of job always comes up short, price it higher or stop offering it.
A worked example
Here's the example that's already filled in above, so you can see how the Am I Undercharging? Price Check works before you enter your own numbers.
- What you charge for the job$120
- Your hours on the job2
- Your drive time, round trip (min)30
- Supplies and materials$10
- Truck and fuel for the trip$8
- Helper pay for this job$0
- Overhead (insurance, phone, software)10%
- Set aside for taxes25%
- Yearly take-home pay you want$60,000
- Weeks you work a year48
- Hours you work a week, driving included40
The result: your real pay per hour $27.00; pay per hour you need $31.25; difference per hour Short $4.25; price that pays your goal $140.
You're about $4.25 an hour short of your goal on this job. Charging about $140 would close the gap.
Related free tools
- Price Increase Letter Writer: a polite price increase letter for your customers, plus how many could leave before you'd earn less.
- Handyman Hourly Rate Calculator: the hourly rate that pays you, covers your business costs and taxes, and leaves a profit.
- Business Health Check: ten quick questions that score how healthy your service business is, with your three biggest fixes.
When you need more than the free Am I Undercharging? Price Check
This calculator answers one quick question. Running a business means doing it on every job, with your own rates saved and a quote you can send.
Am I Undercharging? Price Check questions
How do I know if I'm undercharging?
Work out what a typical job really pays you per hour after costs, drive time and taxes, then compare it with what you need to earn. If it's lower, you're undercharging. This tool does that math for you.
Should drive time count?
Yes. You can't do anything else while you drive between jobs, so it's part of the time the job takes. Leaving it out is one of the most common reasons owners undercharge.
How much should I set aside for taxes?
Many self-employed people set aside 25% to 30%, but it depends on your income, state and deductions. Ask a tax professional what's right for you, and enter that number here.
What if my customers won't pay more?
Start with new customers, explain what's included, and give existing customers notice. Some may leave, but you often earn more from fewer, better-paying customers. Our Raise Your Prices Letter can help.