Most woodworkers set their hourly rate by looking at what other people charge, or worse, by what feels "fair." Both approaches skip the only question that matters: what does your shop need to earn for you to keep doing this?

Start from your income, not the market

Say you want to take home $60,000 a year before taxes. That's your target gross pay — what the business pays you. Everything else gets built on top of it.

Add the costs that exist whether or not you're building

Your shop costs money even in a slow month: rent, insurance, software, utilities, and the blades, bits, and abrasives you burn through. Add a realistic annual tool budget — machines wear out and need replacing.

As an illustrative example: $500/month of overhead plus a $2,000 annual tool budget adds $8,000 a year your revenue has to cover before you get paid.

Count only the hours you can actually bill

If you're in the shop 40 hours a week, you are not billing 40 hours. Design work, quoting, emails, material runs, glue-ups drying, and cleanup eat 20–30% of a typical week. At 75% billable efficiency with two weeks of vacation, a 40-hour week becomes 1,500 billable hours a year — not 2,080.

The arithmetic

• Revenue needed: $60,000 target pay + $8,000 overhead = $68,000
• Billable hours: 40 × 50 weeks × 75% = 1,500 hours
• Required rate: $68,000 ÷ 1,500 ≈ $45/hour

And remember taxes come out of that $60,000: as a sole proprietor you'll pay self-employment tax (15.3%) plus income tax, so the take-home is meaningfully less. If the resulting rate feels high, that's the point — the market-rate number you were charging was quietly paying you less than minimum wage for the hours you actually worked.

Run your own numbers in the free Pay Yourself Calculator — it does this math, including the tax estimate, in about two minutes.

FAQ

What if my market won't bear my required rate? Then you know the gap you're subsidizing out of your own paycheck, and you can decide deliberately: raise efficiency, cut overhead, change product mix, or accept the gap. That's a business decision instead of a surprise.

Should I charge different rates for different work? Many shops do — a design rate, a bench rate, and an install rate. But they should all be derived from the same revenue requirement, not guessed independently.

How often should I recalculate? At minimum once a year, and any time overhead or your schedule changes meaningfully. Once your rate is set, quoting consistently with it is the discipline that makes it real — that's what QuoteItRight is for.