The most important number in your price book isn't a price. It's the count of billable hours you assumed when you set your labor rate. Get it wrong by a few hundred hours a tech, and every job in the book is mispriced in the same direction.
Billable hours in plain English
Picture an example plumber's Tuesday. She's paid for 9 hours. She spends 5.5 hours on three paying jobs, 1.5 hours driving between them, 45 minutes at the supply house, 30 minutes back on a leak she fixed last week, and 45 minutes at the shop restocking and finishing paperwork.
Her billable hours that day are 5.5. The callback time was on site, but nobody paid for it.
| Example day | Hours | Billable |
|---|---|---|
| Three paying jobs | 5.5 | 5.5 |
| Driving between jobs | 1.5 | 0 |
| Supply house run | 0.75 | 0 |
| Callback on last week's leak | 0.5 | 0 |
| Shop and paperwork | 0.75 | 0 |
| Total | 9.0 | 5.5 (61%) |
What counts as billable?
| Billable | Paid but not billable | |
|---|---|---|
| On site | Time on a job the customer pays for | Callbacks, warranty labor you absorb, no-charge visits |
| Diagnosis | Charged diagnostic or a diagnosis that leads to a sale | Uncharged diagnosis that didn't sell |
| Travel | Only if you bill a trip charge or travel time | Driving between jobs, parts runs |
| Office and shop | Rarely | Meetings, restock, paperwork, training |
Drive between job sites during the workday is paid time: federal rules count it as hours worked.1 That is why drive time is the largest gap between paid and billable hours for most service techs.
How do you calculate billable hours for pricing?
- 1
Start with paid hours
52 weeks × 40 hours = 2,080 for a full-time tech. Production workers at specialty trade contractors averaged about 39.5 paid hours a week in August 2026.
- 2
Subtract paid time off
Holidays, vacation and sick days. Example: 8 holidays and 5 vacation days = 104 hours, leaving 1,976 hours at work.
- 3
Apply your utilization
Use your real number from timesheets, not a hope. Example: 1,976 × 62% = 1,225 billable hours a year.
- 4
Divide your costs by it
Tech cost, overhead share and target profit, all divided by billable hours, give the hourly rate your prices must carry.
The weekly hours figure is from the BLS Current Employment Statistics survey.2
A worked example with public wage data
In June 2026, private employers paid $49.01 per hour worked in total compensation for installation, maintenance and repair occupations, of which $33.61 was wages and salaries.3 Use that as an example loaded cost.
Tech cost per billable hour
That $79.06 is only the technician. Overhead (office, trucks, insurance, software) and profit come on top, also spread over the same 1,225 hours. The labor rate calculator does this with your own numbers.
Common mistakes
- Using 2,080 hours as billable. That's paid hours with no time off and 100% utilization. Nobody bills that.
- Using the best tech's numbers for everyone. Price on the shop's average, not your top performer.
- Forgetting apprentices and helpers. If their hours aren't billed separately, their cost has to be in the rate.
Billable hours and flat-rate pricing
Flat-rate shops sometimes say billable hours don't apply to them. They do, one step removed. A flat-rate task price is usually the labor rate times the task's book hours, plus materials and markup. If the labor rate was built on 1,400 billable hours a year and the team really bills 1,150, every flat-rate price is short, even though no customer ever sees an hourly number. Flat rate vs time and materials covers the trade-offs between the two methods.
What raises billable hours
| Lever | Why it works | How to check |
|---|---|---|
| Less drive time | More of the paid day on site | Drive minutes per job |
| Fewer callbacks | Return visits are almost never billed | Callback rate by tech |
| Charging for diagnosis | Turns unpaid diagnostic time billable | Uncharged diagnostics per month |
| Full stock on the truck | Fewer supply-house runs | Mid-day parts stops |
| A full board | Fewer gaps between jobs | Idle time between jobs |
The ratio of billable to paid hours is utilization.
How often should you recheck your billable-hours assumption?
At least once a year, and any time the business changes shape. Adding a second location, shifting from install to service work, or moving into a bigger service area all change drive time and therefore billable hours. So does a busy season: a summer with full boards may run several points higher than the shoulder months, and pricing on summer alone overstates the year.
A simple habit works: each quarter, total the last 13 weeks of paid hours and on-job hours from timesheets, compute the ratio, and compare it with the number in your labor rate. If the gap is more than a few points for two quarters in a row, update the rate or fix the lost hours.
Billable hours sanity check
- Paid hours come from payroll, including overtime
- Paid time off is taken out before applying utilization
- Callbacks and no-charge visits are excluded from billable time
- Apprentice and helper cost is included in the rate
- The rate is rechecked against the last 13 weeks every quarter
How billable hours show up in TradesWork
Timesheets in TradesWork build themselves from job statuses: marking en route, arrived and completed records drive time and on-job time automatically, and the field app clock covers shop, training and breaks with nine built-in time codes. Approving a week writes labor cost to each job, so job margins use the hours that were actually worked.
Footnotes
-
29 CFR 785.38, Travel that is all in the day's work, Code of Federal Regulations, via Cornell Legal Information Institute. ↩
-
Average weekly hours of production and nonsupervisory employees, specialty trade contractors (CES2023800007), U.S. Bureau of Labor Statistics. 39.5 hours in August 2026 (preliminary), seasonally adjusted. ↩
-
Employer Costs for Employee Compensation, June 2026, Table 4, U.S. Bureau of Labor Statistics. Private industry, installation, maintenance and repair occupations. ↩
