Effective Hourly Rate (Trades)
It is what you actually earned per hour on the job — including drive time, estimates, and callbacks.
Formal definition
Effective hourly rate equals total revenue divided by total hours worked by field and owner staff.
Why it matters
A posted labor rate of
Where you see it
- Home services business coaching
- HVAC and plumbing owner groups
- Field service KPI spreadsheets
- Franchise performance reviews
- Trade business acquisition diligence
Worked example
- Annual revenue: $600,000.
- Total hours worked: 5,000.
- Effective rate = $600,000 ÷ 5,000 =
- Interpretation: Every hour on the clock averaged
How Business metrics calculates it
Revenue ÷ Total hours worked.
Where people fool themselves
Trades effective rate that excludes drive time makes every shop look elite. Put windshield hours in the denominator; customers already pay for them in the ticket or they do not.
Run it on your own numbers: the Trades & Home Services calculator.