How Much Should a Contractor Charge Per Hour in 2026?

Ask five contractors what they charge per hour, and three of them will give you a number that doesn't actually cover their costs. They'll say "$55 an hour" or "$75 an hour" — but when you factor in their truck, their insurance, the time they spend driving between jobs, the quotes they write that don't convert, and the paperwork they do on Sundays, they're making less per hour than their employees.

Setting your hourly rate isn't a feeling. It's math. And the math is different depending on whether you're a solo operator, running a small crew, or managing a larger operation. Here's how to calculate the right number for your situation.

2026 Contractor Hourly Rates by Trade

These are billing rates — what the customer pays per hour, not what the contractor takes home. Rates are for Ontario and comparable Canadian/US markets.

These ranges are wide because they depend on experience, location (Toronto rates are 15-25% higher than rural Ontario), complexity of work, and market demand. The high end reflects licensed, experienced contractors in high-demand markets. The low end is entry-level in smaller markets.

The Formula: How to Calculate Your Minimum Hourly Rate

Forget what competitors charge. Start with your own numbers.

Step 1: Determine your target income. What do you want to take home after all expenses? Be honest. If you want to earn $90,000 per year, that's your starting number.

Step 2: Calculate your billable hours. This is the critical step most contractors skip. You don't work 2,080 billable hours per year (40 hrs x 52 weeks). Here's the reality:

• 52 weeks - 2 weeks vacation - 1 week sick/personal = 49 working weeks
• 49 weeks x 45 hours/week = 2,205 total working hours
• Subtract non-billable time: driving (15%), quoting/admin (15%), marketing/sales (5%), equipment maintenance (5%)
• Billable hours: 2,205 x 0.60 = 1,323 billable hours per year

For a solo operator, 1,200-1,500 billable hours is realistic. If you're more efficient, you might hit 1,600. If you spend significant time on sales and admin, it might be 1,100.

Step 3: Add your annual overhead. Every cost that exists regardless of whether you have jobs:

• Vehicle: $15,000/year (payment + insurance + fuel + maintenance)
• Insurance (liability + tools): $4,000/year
• Phone + software: $3,000/year
• Tools and equipment: $3,000/year (replacement + new)
• Accounting + legal: $2,500/year
• Marketing: $2,000/year
• Licenses + training: $1,000/year
• Total overhead: ~$30,500/year

Step 4: Calculate.

(Target Income + Overhead) / Billable Hours = Minimum hourly rate

($90,000 + $30,500) / 1,323 = $91.08/hr

That's your break-even rate. Below $91/hr, you're earning less than your target income. And this doesn't include profit margin yet — this is just cost recovery.

Step 5: Add profit. A 15% profit margin on top of costs:

$91.08 x 1.15 = $104.74/hr

Rounded up: you should be billing at least $105/hr. If you're charging $65/hr, you know exactly where the gap is.

Why Most Contractors Undercharge

Three reasons, and they're all solvable:

1. They don't know their real costs. They think the hourly rate only needs to cover their wage + some gas money. They forget insurance, vehicle depreciation, tool replacement, the hours spent quoting jobs that don't close, and the taxes they'll owe in April.

2. They're afraid of losing bids. "If I charge $105/hr, the homeowner will go with the $65/hr guy." Maybe. But the $65/hr guy is either losing money (and won't be in business next year) or cutting corners (and the homeowner will call you to fix it). Competing on price is a race to bankruptcy.

3. They confuse revenue with income. "$200,000 in revenue sounds great." But after materials, subs, overhead, and taxes, a contractor doing $200,000 in revenue might take home $55,000-$70,000. That's a decent living, but it's not $200,000 — and the hourly rate needs to be set against the take-home, not the revenue.

When to Use Hourly vs. Fixed Pricing

Hourly billing makes sense in specific situations:

• Troubleshooting and diagnostics — "I don't know what's wrong yet" work
• Time and material (T&M) service calls — small repairs, fixture swaps
• Change orders within a fixed-price project — the extra scope that wasn't in the original quote
• Advisory / consultation — when someone wants your expertise, not your labor

For defined-scope project work (renovations, installs, new construction), fixed pricing per project or per unit is almost always better. It rewards efficiency, it's predictable for the customer, and your margin grows as your crew gets faster.

The Minimum Service Call Fee

Every contractor should have a minimum service call fee. When a homeowner needs you to drive 30 minutes to look at a dripping faucet that takes 10 minutes to fix, your hourly rate on that job is whatever you bill divided by the 70 minutes you actually spent (30 min drive + 10 min work + 30 min drive back).

A service call minimum of $125-$175 (first hour) ensures you're covered:

• Vehicle time: $0.65/km x 40 km round trip = $26
• Labor: 70 minutes at your burdened rate of ~$50/hr = $58
• Overhead allocation: $15
• Profit: $26
• Total: $125

Structure it as: "Service call fee: $125 (includes first hour). Additional time billed at $X/hr." The homeowner knows exactly what they're paying before you show up, and you're not losing money on small jobs.

FAQ

How much does a contractor charge per hour in Canada?

In Ontario (2026), $55-$75/hr for general labor and painters up to $85-$150/hr for licensed electricians and plumbers. These are billing rates. Actual take-home after overhead, taxes, and costs is roughly 40-55% of the billing rate.

How do I calculate my hourly rate as a contractor?

(Target Annual Income + Annual Overhead) / Billable Hours Per Year x (1 + Profit %). A contractor targeting $90K with $30K overhead and 1,300 billable hours needs to bill at least $92/hr before profit. With 15% profit: $106/hr.

Should contractors charge a minimum call-out fee?

Yes. $85-$175 for the first hour, covering travel, vehicle costs, and opportunity cost. Without a minimum, you lose money on every small job. Structure it as a flat first-hour fee with an hourly rate for additional time.