Companion to "Your Cost Floor."
The four-step floor build. The floor is not your price; your price is a market decision. The floor is arithmetic, and it is the line below which the correct answer is no.
Example inputs as taught: $40/hr take-home target, 60% billable share (6 of 10 hours billable), $8 overhead per billable hour, 30% example tax set-aside (covers the 15.3% self-employment tax plus a modest income-tax slice). Each is an example; your numbers are yours.
| Step | Example | Your number |
|---|---|---|
| 1. Take-home target per worked hour (every hour the business takes: on site, commute, quoting, supply runs, invoicing) | $40.00 | $ |
| 2. Divide by billable share, from a two-week time log | $66.67 | $ |
| 3. Add overhead per billable hour (monthly overhead ÷ monthly billable hours) | $74.67 | $ |
| 4. Divide by after-tax share (1 − set-aside rate) | $106.67 | $ |
| Floor, rounded up for quoting | $110 | $ |
Check lines: 40 ÷ 0.60 = 66.67; 66.67 + 8 = 74.67; 74.67 ÷ 0.70 = about 107, quoted as 110.
Track honestly. Travel, quoting, bookkeeping, chasing invoices, learning, and fixing your own equipment are not billable. Plenty of new operators start lower than they guessed.
| Week | Hours worked | Hours billable | Billable share |
|---|---|---|---|
| Week 1 | % | ||
| Week 2 | % | ||
| Two-week share (step 2 input) | % |
| Insurance | $ | Software, scheduling tools | $ |
| Phone plan, business share | $ | Supplies consumed | $ |
| Fuel | $ | Payment processing fees | $ |
| Marketing | $ | Accountant | $ |
| Monthly total | $ | ÷ monthly billable hours |
| Self-employment tax (12.4% Social Security + 2.9% Medicare, both halves yours now) | 15.3% |
| Income tax slice (your bracket and state; run your own estimate or ask the person doing your taxes) | % |
| Set-aside rate (example taught: 30%) | % |
Your floor is not your price. It is the line below which the correct answer is no. A job below the floor is not a small job; it is a donation with extra steps. When someone offers you less, you are not "losing a little margin." You are paying to work.
| Lower the take-home target for a defined period while you build volume | ☐ tried, period ends |
| Cut overhead until the floor drops | ☐ tried |
| Change what you sell or whom you sell it to so the work commands more | ☐ tried |
Do not quietly eat the difference. That path ends with you subsidizing strangers out of your savings.