Price a home-based service from the whole working week, not the hour you are in front of a customer. Most owners set a rate that sounds fair for the billed hour and give away every other hour: driving, messaging, quoting, supply runs, cleaning gear and bookkeeping. This guide shows how to count those hours, add your costs and the pay you actually want, and build rates, minimums and travel charges that hold up. Allow an evening and a spreadsheet.
Step 1: Count every hour the business takes
Track or reconstruct one ordinary month of hours, split into billed and unbilled. If you can, track two live weeks with a notes app; otherwise rebuild last month from your calendar, messages and fuel receipts.
Use these categories:
| Category | Typical examples |
|---|---|
| Billed work | Time charged to customers |
| Travel | Driving between home and jobs and between jobs, parking, loading |
| Messaging and booking | Texts, calls, emails, rescheduling |
| Quoting | Site visits, writing estimates, follow-ups that don't book |
| Supplies and equipment | Shopping, restocking, cleaning, maintenance |
| Admin | Invoicing, bookkeeping, chasing payment |
| Learning and marketing | Courses, posting, updating listings |
Home-based owners almost always underestimate messaging and admin because they happen in small pieces: five minutes at breakfast, ten in the evening. Add them up honestly.
Step 2: Add up your monthly costs
List what the business costs to run each month, including the share of household costs it really uses. Typical lines for a home business:
- vehicle payment or a fair share of the family car, fuel, insurance and maintenance
- phone and internet share
- software and subscriptions
- business insurance
- supplies and consumables
- equipment replacement, set aside monthly
- any fees for your licence, memberships or listings
How much of your home costs you can claim for tax is a separate question. The CRA's page on business-use-of-home expenses and an accountant cover that. For pricing, simply count the real cash the business consumes.
Step 3: Decide what you need to take home
Set a monthly figure you want to earn before personal income tax, and put money aside for the things an employer would otherwise pay. Self-employed people fund their own holidays, sick days and retirement. A common way to think about it is to plan for fewer working weeks than there are in a year, because illness, family and slow seasons happen.
For example, if you want to work 44 weeks a year rather than 52, every working month has to carry a little more than one-twelfth of the year.
Step 4: Work out the real hourly rate today
Real hourly rate = (monthly income − monthly costs) ÷ all hours. Here is a worked example for a home-based tutor:
- Charges $60 an hour and bills 70 hours a month: $4,200.
- Unbilled hours: 14 travelling to students, 10 messaging parents and scheduling, 8 preparing materials, 4 on admin. Total 36.
- All hours: 106.
- Monthly costs: $650.
- Real hourly rate: ($4,200 − $650) ÷ 106 = about $33.50.
The tutor thought he earned $60 an hour. He actually earns about half that. This is normal, and it is the single most useful number in a home business.
Step 5: Build the rate you need
Required rate = (target income + monthly costs) ÷ billed hours you can realistically sell. Suppose the tutor wants $5,000 a month before tax, keeps costs at $650, and wants to cut total hours to about 95 by trimming travel.
If he keeps 70 billed hours: ($5,000 + $650) ÷ 70 = about $80.70 an hour. That may be more than his market will bear in one step. So he looks at the other levers:
- Group sessions for two or three students at a per-student price, raising earnings per hour without raising each family's bill much.
- Online sessions for families outside his core area, removing travel time.
- A travel charge for in-home sessions beyond his neighbourhood.
- Packages paid monthly in advance, which reduce messaging and missed sessions.
He sets $70 for in-home sessions, $62 online, and a $10 travel charge beyond his zone. Together with fewer travel hours, his real rate moves into the low $40s. Not his full target yet, but a large step, with a plan for the next one.
Step 6: Set minimums and travel zones
A minimum charge protects you from jobs that cost more in travel and setup than they bring in. Work it out from your real rate: if a visit takes 40 minutes of travel and setup before any work starts, a one-hour job is really nearly two hours of your time.
For travel, draw two or three zones on a map around home:
- Core zone: no travel charge; this is where you want most work.
- Outer zone: a modest flat charge.
- Beyond: by arrangement only, or not at all.
Zones also make scheduling easier, because the price itself encourages customers near you.
Step 7: Account for tax in your prices
Decide whether your published prices include sales tax, and say so clearly. The CRA explains when a business must register for and start charging GST/HST, including the $30,000 small supplier threshold that applies to most businesses. If your sales are approaching that level, ask an accountant how it affects you before it arrives, because your prices may need to change.
Step 8: Introduce the new prices
Change prices for new customers first, then existing ones on a date you set. A calm, short message works better than a long apology. A template:
Hi [Customer name], thank you for choosing [Business name]. From [date], my rate for [service] will be [new price]. This reflects [rising costs / travel time / the time each visit really takes]. Your booking on [date] stays at the current price. Questions are always welcome.
Expect a few customers to leave. Before you send anything, calculate how many you could lose and still be better off. In most home-based businesses the answer is surprisingly many.
Pricing mistakes specific to working from home
- The "no overhead" discount. Your costs are lower than a shop's, but they are not zero, and your time is worth the same.
- Pricing for friends and neighbours. Early customers often came through personal connections at low prices. Grandfather them for a set time, then move them to standard rates.
- Quoting without the drive. A job 30 minutes away costs you an hour of driving before any work.
- Never revisiting prices. Put a yearly review in your calendar.
Checklist
- ☐ One month of hours tracked, billed and unbilled
- ☐ Monthly costs listed
- ☐ Target take-home income set
- ☐ Real hourly rate calculated
- ☐ Required rate calculated and levers chosen
- ☐ Minimum charge and travel zones set
- ☐ Tax treatment of prices decided with an accountant's input
- ☐ Customer message drafted and date chosen
Once pricing holds, read from solo to first hire to see how far your new numbers can stretch. If you'd like a second pair of eyes, our pricing and profit review does this with you, and you can contact us for a free first conversation.
Frequently asked questions
What is a real hourly rate?
It is what the business pays you per hour of your life after costs: monthly income minus business costs, divided by every hour spent on the business, billed or not. It is almost always lower than the rate you quote.
Should I charge for travel separately?
Often, yes. A travel zone or minimum stops nearby customers subsidising distant ones, and nudges your schedule toward tighter routes.
How much notice should existing customers get before a price rise?
There is no single rule, but four to eight weeks with a clear date and a short reason is reasonable for most home-based services.
Does GST or HST affect my pricing?
It can. The CRA explains when a business must register and start charging GST/HST. Once you charge it, decide whether your published prices include tax or add it, and say so clearly. Ask an accountant about your own situation.