Contractor Bill Rates by State and Trade (2026)

You're Probably Undercharging

If I could tell every contractor one thing, it would be this: your bill rate is almost certainly too low.

From reviewing the financials of over 1,000 contractors — first in private equity evaluating contractor acquisitions, then building accounting products alongside 1,000+ commercial contractor teams — the pattern is overwhelming. Contractors in the bottom quartile of bill rates aren't there because their market "won't support" higher prices. They're there because they priced their labor when they started the business and never meaningfully adjusted.

Meanwhile, their labor costs, insurance, vehicle expenses, and overhead have all climbed. Their rates haven't.

Here's what contractors are actually charging — not what the internet says they should, but what I've observed across 1,400+ companies with real billing data.

National Bill Rate Benchmarks

The median across all trades is $79/hr. But this national number hides enormous geographic and role-based variance.

Bill Rates by State

Geography matters more than almost any other variable. The same journeyman HVAC tech's work gets billed at dramatically different rates depending on where they operate.

If you're a contractor in California billing $80/hr, you're 30% below market. That's not a competitive strategy — it's a margin problem. At $80/hr with a $35/hr loaded labor cost, your labor margin is 56%. At the market rate of $113/hr, that same labor cost produces 69% margin. On 20,000 billable hours per year, the difference is $660,000 in gross profit.

Rate Cards by Role

Within any company, rates vary by role. Here's the distribution from our dataset of 1,567 companies (regular hours only):

Important caveat: This data comes from the "rate card" field in contractor management software, which companies use inconsistently. Some enter their customer billing rate ($100-$200+/hr for commercial work), others enter loaded labor cost or even base wages ($25-$60/hr). The medians reflect a blend of both. Companies using this as a true customer bill rate tend to cluster at P75-P90.

For reference, internet consensus for commercial HVAC billing rates is $100-$200/hr (what the customer pays). Journeyman wages are $25-$45/hr (what the tech earns). The ratio between the two is your labor markup, and it needs to cover:

• Base wages + payroll taxes + benefits (the "loaded" labor cost)
• Vehicle/truck costs allocated per tech
• Tool and equipment usage
• A share of office overhead
• Profit margin

The standard markup is 2.5-3.5x the employee's fully loaded labor cost (base wage plus taxes, benefits, workers comp, and PTO — not just the base wage). A tech with a $50/hr loaded cost should be billed at $125-175/hr. If your markup is below 2.5x loaded cost, you're almost certainly not covering full overhead.

For a deeper breakdown of how rates shift from helpers and apprentices to journeymen and foremen — including BLS wage comparisons and markup multipliers — see our bill rate benchmarks by skill level.

Why Most Contractors Underprice

1. They Don't Know Their True Cost Per Hour

Most contractors calculate their bill rate based on labor cost plus a "reasonable" markup. But they undercount the labor cost.

True hourly cost includes:

• Base wage: $25-45/hr depending on trade and experience
• Payroll taxes: 7.65% (FICA) + state unemployment
• Workers comp: 5-15% of payroll in construction trades
• Health insurance: $500-1,500/month per employee
• Paid time off: equivalent of 10-15% of base wage
• Training time: 40-80 hours/year of non-billable time

A tech earning $35/hr base often has a loaded cost of $50-55/hr once you include all of the above. If you're marking up from the base wage instead of the loaded cost, your margins are thinner than you think.

2. They Overestimate Billable Hours

The other common mistake: assuming techs are billable for 8 hours per day, 250 days per year (2,000 hours).

Reality: after vacation, sick days, training, drive time, admin time, callbacks, and weather delays, most techs are productively billable for 1,000-1,500 hours per year depending on trade, company size, and how tightly you track time. Industry data from ServiceTitan and others shows many contractors land in the 800-1,200 range. That's 25-50% fewer hours than the theoretical maximum.

Your bill rate needs to cover all your costs over actual billable hours, not theoretical hours. If you need $150K in revenue per tech to cover all costs and profit, and your tech bills 1,200 hours per year, your minimum rate is $125/hr — not $75/hr based on 2,000 hours.

3. They're Afraid of Losing Customers

The fear: "If I raise rates, I'll lose jobs." The reality: most contractors who raise rates by 10-15% lose fewer customers than they expect — and the ones they lose are often their lowest-margin customers anyway.

In my experience, quote conversion rates for well-run contractors land around 73.9%. If you raise your rate 10% and your conversion drops from 73.9% to 68%, you're winning fewer jobs but making more money on each one. Do the math — you'll almost always come out ahead.

The contractors who charge the most aren't necessarily the best technicians. They're the ones who've done the financial analysis, know their true costs, and price accordingly.

How to Benchmark Your Rates

Step 1: Calculate your loaded labor cost. Add up every dollar you spend on a tech — wages, taxes, benefits, WC, PTO, training, uniforms, tools. Divide by actual hours worked. That's your true cost per hour.

Step 2: Calculate your required markup. Your bill rate needs to cover loaded labor + allocated overhead + target profit margin. Most healthy contractors run a 3x markup from loaded cost.

Step 3: Compare to market. Use the tables above. If you're more than 15% below your state's average, you're likely underpriced. If you're above average, verify your job-level profitability confirms the margin is actually there.

Step 4: Adjust. If you need to raise rates, do it on new customers immediately and existing customers at the next contract renewal. Most commercial customers expect annual increases of 3-8%. If you haven't raised rates in 3 years, you're 10-25% behind inflation in labor and materials.

When Lower Rates Are the Right Strategy

Not every contractor should charge $150/hr. Here are legitimate reasons for lower rates:

Residential service in a price-sensitive market. If your customer base is homeowners in a market with many competing contractors, your rate ceiling is lower. But your volume should be higher and your overhead should be proportionally lower.

Apprentice-heavy workforce. If 60% of your field labor is apprentices at $18-22/hr, your loaded costs are genuinely lower, and a $75-85/hr bill rate can still produce healthy margins.

Volume/flat-rate model. Some contractors price low on hourly rates but make it up on flat-rate pricing for specific jobs. In this model, the hourly rate is less relevant — job-level margin is what matters.

Market entry. If you're new and building a customer base, lower introductory rates are a valid strategy. Just know when to raise them. The contractors who get stuck are the ones who never transition from "market entry" pricing to "established business" pricing.

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The Bottom Line

The median contractor bills $79/hr. Top quartile bills $100-120. The variance by state is dramatic — $128/hr in Illinois, $113 in California, $90 in the middle of the country.

If you haven't meaningfully raised your rates in 2+ years, you're almost certainly underpriced. Labor costs, insurance, fuel, and overhead have all climbed. Your rates need to climb with them.

Price for what your work is worth and what the market supports. The contractors who build wealth aren't the ones working the most hours — they're the ones getting paid fairly for the hours they work.

Q: How does Level help with pricing strategy? A: We analyze your actual labor costs (loaded, not just base wages), calculate your true overhead rate, and benchmark your bill rate against market data for your state and trade. If you're underpriced, we'll show you exactly how much margin you're leaving on the table — and model the impact of a rate increase on your revenue and profitability. The first profitability audit is free.

Q: Should I use hourly billing or flat-rate pricing? A: It depends on your service mix. For service and repair work, flat-rate pricing (based on the job, not the hour) typically produces higher margins because efficient techs don't get penalized for working fast. For project and install work, T&M or fixed-bid pricing is more common. We help contractors analyze which pricing model produces the best margin for each service type.