How to Calculate Your Home Care Bill Rate from Caregiver Wages
Bill rate = loaded wage plus overhead, divided by one minus your margin. The formula, a quick table by wage, the payroll taxes behind it, and where shortcuts mislead.
By Caregiver Scheduling Team ·
Bill rate = (wage × (1 + payroll burden) × (1 + paid non-billable time) + overhead per billed hour) ÷ (1 − target margin). For an $18 wage with 17% burden, 8% non-billable time, $8.50 of overhead per hour and a 12% margin, that is about $35.50. Shortcuts like “double the wage” can land close, but only if your costs happen to match the assumption behind them.
What is the bill rate formula?
Four steps: load the wage, add the paid time you cannot bill, add overhead, then divide by one minus your margin. Each step is a cost that a billed hour has to carry.
| Step | Formula | $18 wage example |
|---|---|---|
| Loaded wage | wage × (1 + burden) | $18 × 1.17 = $21.06 |
| Labor per billed hour | loaded × (1 + non-billable) | $21.06 × 1.08 = $22.74 |
| Add overhead | + overhead per billed hour | $22.74 + $8.50 = $31.24 |
| Add margin | ÷ (1 − margin) | $31.24 ÷ 0.88 = $35.50 |
Divide by (1 − margin), do not multiply by (1 + margin). Multiplying $31.24 by 1.12 gives $34.99, and the margin on that price is 10.7%, not 12%. The full explanation of each input is in how much to charge for home care.
What goes into the 17% payroll burden?
Federal payroll taxes alone are 7.65% of wages, plus federal unemployment tax on the first $7,000. State unemployment, workers’ compensation and paid leave make up the rest, and they vary by state.
| Cost | Rate | Source |
|---|---|---|
| Social Security, employer share | 6.2% of wages | IRS Topic 751 |
| Medicare, employer share | 1.45% of wages | IRS Topic 751 |
| Federal unemployment (FUTA) | 6.0% on the first $7,000, usually 0.6% after the state credit | IRS Topic 759 |
| State unemployment | Varies by state and your claims history | Your state agency |
| Workers’ compensation | Varies by state and class code | Your policy |
| Paid sick leave, holidays, benefits | Whatever you offer | Your policy |
FUTA at 0.6% of $7,000 is $42 a year per caregiver, under 0.2% of a $35,000 wage. Workers’ comp is the swing factor. Pull your real rates and replace 17% with your own number. See caregiver payroll burden.
What bill rate does each wage need?
Roughly twice the wage at $17, falling toward 1.9 times as wages rise. The table assumes 17% burden, 8% non-billable time, $8.50 overhead per hour and a 12% margin.
| Wage | Break-even rate | Bill rate | Multiple of wage |
|---|---|---|---|
| $15 | $27.45 | $31.19 | 2.08× |
| $16 | $28.72 | $32.63 | 2.04× |
| $17 | $29.98 | $34.07 | 2.00× |
| $18 | $31.24 | $35.50 | 1.97× |
| $20 | $33.77 | $38.38 | 1.92× |
| $22 | $36.30 | $41.25 | 1.88× |
The multiple falls as wages rise because overhead is a fixed amount per hour. Set a minimum visit length so short visits do not sit below break-even. See minimum visit length.
How does your rate compare to the market?
The 2025 national median price for non-medical in-home care was $35 an hour, per the CareScout Cost of Care Survey, up 3% from 2024. The national median caregiver wage was $17.21 in May 2025, per the BLS. That puts the typical market multiple at about 2.03 times wage, close to the formula’s result. Both are national medians, and CareScout is a survey, not a rule. See hourly rates by state and our hourly rate tool.
Which pricing shortcuts mislead?
All three skip a cost. They work by luck when your costs match the assumption.
“Double the wage.” Close for a $17 wage with modest overhead. Underprices if you have high workers’ comp, a lot of travel or a full office.
“Target 40% gross margin.” Bill rate = labor ÷ 0.60. It ignores overhead entirely. A small agency with a full-time scheduler can hit 40% gross and still lose money.
“Match the competition.” Useful as a sanity check, but their wage, their overhead and their losses are not yours.
When should you charge a different rate?
Whenever your cost per hour changes, which it does for short visits, differentials and overtime.
- Short visits: a higher rate or a minimum, because travel is a bigger share of the hour.
- Weekends and holidays: add the differential you pay, times (1 + burden), divided by (1 − margin). A $2 differential at 17% and 12% needs $2.66.
- Overtime the client requests: bill a higher rate for hours over 40 in a week. See home care overtime rules.
- Live-in: a daily rate. See live-in care rates.
How Caregiver Scheduling handles this
Timesheets, private-pay invoicing at each client’s own rate and QuickBooks export are coming soon. Today, GPS check-in gives you a verified record of the hours worked. $199/month for up to 10 caregivers or $299/month for up to 50, free for 30 days.
FAQ
What markup do home care agencies use? The national medians work out to about 2.03 times the caregiver wage (CareScout’s price over the BLS wage). Calculate from your own costs.
Is a 40% gross margin enough? With a 12% target margin, only if overhead is below about 28% of revenue. Check net margin, not just gross.
What is the employer’s share of payroll tax? 6.2% Social Security plus 1.45% Medicare, so 7.65% of wages, plus FUTA of up to $420 a year per employee before the state credit (IRS).
Should I charge more for personal care than companion care? If you pay more for it or it carries higher insurance cost, yes. Price the difference with the same formula.
This article is general information, not tax or legal advice. Check your state’s payroll tax and workers’ compensation rates.