Know Your True Hourly Cost Before You Set Any Price

EPISODE 05  |  UK COMPUTER REPAIR BUSINESS

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If you don’t know what an hour really costs you, every price is a guess.

Your wage is not your hourly cost. A charge that looks generous compared with an employee’s pay can still be unprofitable once non billable time, rent, vehicles, software, insurance, tools, tax and rework are included.

Why this matters

This is not theory. It affects Monday morning. Most small tech businesses can't sell every working hour. Time disappears into quotes, calls, travel, collections, purchasing, paperwork and jobs that overrun. Pricing must be based on realistic billable capacity, not the number of hours you're awake.

Follow the money

Put your owner hat on. The true hourly cost is a capacity calculation, not a wage comparison. It must recover both visible delivery time and the administration, travel, training, holiday, rework and management that make delivery possible. If realistic billable hours are overstated, every price built on the figure will be weak. A sound calculation therefore protects quality as well as profit because it funds the time and resources needed to complete work properly.

Shop, callout or MSP?

Repair shop: A shop should include premises costs, front desk interruptions, bench equipment, card fees and the time spent handling devices before and after repair.

Callout technician: A callout technician must include travel, parking, vehicle costs, gaps between appointments and the risk of a visit running over.

MSP: An MSP must include tools, monitoring, documentation, account management, escalation and the quiet months when clients still expect cover.

What good looks like

Good should be obvious. The process is clear. Someone owns it. You can check the result. No guessing. No last minute rescue mission from the owner. Here is the practical test: Review recovered income per productive hour every month. This isn't about trying to create paperwork. The point is to make quality repeatable and to identify where time, money or trust is still leaking.

What happens in the real world

Here is what this looks like. A sole trader believes a £45 hourly charge is profitable because personal drawings average £20 per working hour. After reviewing the year, only twenty two of forty weekly hours were actually billed. The rest went to travel, quotes, collections, purchasing and support messages. Vehicle, software, insurance and card costs were also omitted.

The recovered cost per billable hour is much closer to the selling price than expected. The trader raises minimum charges, groups appointments and prices several repeatable jobs as packages. Customers still see clear value, while each sold hour now contributes to overhead and future investment.

Measure it or guess forever

Review recovered income per productive hour every month. If the figure remains below the target, improve job control, reduce wasted time or change prices.

Reality check: Don't copy a competitor’s hourly rate without knowing their costs, workload or business model. They may be more efficient, underpriced or losing money.

Do this now: Calculate one honest hourly cost using last year’s figures and realistic billable hours.

From my own experience

A small premises can still carry a surprisingly large cost base. Our TARDIS shop had stock, equipment, opening hours, repairs, customer conversations and all the jobs that happen after the shutters come down. That experience taught me not to confuse an hour at the bench with the true cost of an hour in business. The quiet costs still arrive, usually with excellent punctuality.

Starting cheaply does not make time free

Chips began above my parents' fish and chip shop with low premises costs, credit card debt and a mobile service run from a Mark 2 Ford Mondeo. Low overheads helped me start, but they did not make an hour worthless. Fuel, insurance, failed appointments, tools, administration and the time between jobs still existed. A low starting cost can be an advantage. Pretending it removes the need for profit is how that advantage is wasted.

Five moves. No faffing.

•      Add annual wages or drawings, employer costs and the profit the business needs to retain.

•      Add annual overheads including premises, vehicle, software, insurance, subscriptions, professional fees and marketing.

•      Estimate realistic billable hours after holidays, sickness, administration, travel and business development.

•      Divide the total annual requirement by realistic billable hours to find the minimum recovered cost per hour.

•      Add a margin for risk, investment and profit before turning the figure into customer prices.

No hiding. Answer these.

•      How many hours are genuinely billable?

•      Which costs are missing from the calculation?

•      How much time is lost to rework?

•      What profit must remain for investment and risk? Download our free calculator sheet, this will allow you to figure out how much it costs to run your business, down to the hour and per job.

Tech_Business_Cost_Calculator.xlsx

Download XLSX • 21KB

The bottom line

Bluntly: Your calculator does not care how pleasant the customer is—and neither does VAT.

Next week: Charge for Diagnosis, Not Just the Successful Repair.

About the author

This article was written by Mr Philip Griffiths of Tech For Techs Group Ltd, drawing on his own words, knowledge and first-hand experience of owning and operating a nationally award-winning computer repair business. It has been professionally edited and approved for publication.

Editorial source notes

Primary editorial source: More Than Computer Repair: How to Start, Run and Grow a Trusted Tech Business, completely rewritten edition, August 2026, Philip Griffiths.