Start with capacity
A service business cannot bill every working hour. Allow for admin, sales, travel, holidays and gaps between jobs.
Recover overhead
Your rate needs to cover both the time spent delivering work and the overhead required to keep the business operating.
Add profit deliberately
Paying yourself for labour is not the same as business profit. Build a margin above costs so the business can invest and absorb risk.
ProfitMaths guides provide general educational information, not personalised accounting, tax, legal or financial advice.