How to price a service: from cost per hour to a profitable rate

Service businesses often price by gut feeling. A simple calculation gives you a floor you shouldn't go below.

Step 1: your monthly cost

Add salaries (including your own), rent, systems, insurance and other overheads. Example: SAR 60,000 a month.

Step 2: your billable hours

Not every working hour is billable. If your team works 480 hours a month and 60% is billable, you have 288 billable hours.

Step 3: cost per billable hour

SAR 60,000 ÷ 288 = about SAR 208 per hour. Below that, you lose money.

Step 4: add your margin

For a 30% profit margin: 208 ÷ (1 − 0.30) = about SAR 297 per hour, before VAT.

Then check the market

• Compare with what clients are used to paying.
• Package work as fixed-price projects where you can estimate hours reliably.
• Track actual hours per project to see which work really pays.

Try the profit margin calculator to test your rates.