Calculating your hourly rate as a tradesperson: how to price without made-up figures
This guide covers German law and practice. A UK edition is in preparation.
You calculate your hourly rate as a tradesperson by setting all of your business costs against your billable working time and deriving an internal rate per hour from that. That rate only becomes fit for a quote once you present it cleanly, together with materials, subcontracted work, mark-ups and the quote’s mandatory details, as a line item with quantity, unit and price.
Calculating your hourly rate: the basic principle
The hourly rate is not just the wage for the work on site. It also has to carry what the business incurs before and after the actual service is carried out.
So start from your own records. What counts are documented costs, realistic working time and prices you can explain on the quote later.
Do not guess line items just to get the quote finished faster. If a price is missing, mark it as open and settle it before the quote goes to the customer.
Calculating your hourly rate: the calculation scheme
The calculation stays clear if you split it into fixed building blocks. Only then decide how the service should appear on the quote.
| Building block | What you record | Result for the calculation |
|---|---|---|
| Business costs | Running costs of the business that jobs have to cover | Cost share per hour |
| Working time | Billable time for carrying out the work, and internal time that is not billed directly | Basis for the internal hourly rate |
| Wage figure | Your own labour or an employee’s labour | Labour cost per hour |
| Mark-up | Risk, work done up front and the result you are aiming for | Uplift on the pure cost rate |
| Quote line item | Quantity, unit and price per service | A price that stands traceably on the quote |
The internal hourly rate is therefore a working figure. On the quote it can become an hourly line item, a fixed-price line item or a service with a different unit, depending on how you describe the work.
Showing a tradesperson’s hourly rate on the quote
A quote needs a clear description of the service with quantity, unit and price per line item. If you quote by the hour, the line item has to be worded so that the customer understands which service that unit covers.
Every quote also carries the full company name with legal form, address, tax number or VAT ID, quote number, date, validity period, and net, VAT and total shown separately. For trades requiring registration under Annex A of the German Crafts Code (Handwerksordnung), the responsible Chamber of Crafts is added.
Small businesses under § 19 UStG (the German VAT exemption) show no VAT and enter the statutory note instead. If you want to check the whole structure of the quote, use the guide Writing quotes as a tradesperson: mandatory details, structure and checklist.
Calculating your hourly rate: typical mistakes
A common mistake is an hourly rate based on gut feeling. That leads to individual jobs looking fine while business costs are not reliably covered.
Another mistake is mixing up the hourly wage and the selling price. The wage is only one component. The quoted price also has to reflect what the business needs for carrying out, organising and processing the job.
Old prices used without checking are a problem too. If you use earlier quotes, you should be able to see which quote a price came from and whether it fits the current service.
Checklist: calculating your hourly rate
- Are all running business costs captured?
- Is it clear which working time is actually billable?
- Is the wage figure looked at separately from the selling price?
- Are materials and subcontracted work checked separately?
- Is the mark-up for risk and the result you are aiming for set deliberately?
- Is there a traceable origin for the prices used?
- Are open prices settled before sending?
- Does the quote show quantity, unit and price per line item?
- Are net, VAT and total shown separately?
- Is the quote’s validity period entered?
Calculating your hourly rate and checking the quote
The calculation does not end with the internal hourly rate. It only ends when the quote can be checked.
Check every line item against three questions: is the service described unambiguously, is the unit chosen appropriately, can the price be backed up. If one of those questions stays open, the quote should not be sent yet.
Especially for recurring services, your own price history helps. It does not replace a trade check, but it gives a clean basis when the same or similar services are quoted again.
Faster with Handschlag
The Handschlag app creates the quote by voice, right on site: you speak the services, quantities and prices, and they become line items with quantity, unit and price. If a price is missing, the app only uses your own quote history; without a match the field stays empty. Before the PDF export it checks the mandatory details and reports specifically what is missing.
Sources
- Handschlag: product details, mandatory details, data protection and guide overview, https://handschlag.dev/llms.txt
- Handschlag guide: writing quotes as a tradesperson, https://handschlag.dev/en/guide/writing-quotes-tradespeople-2026