Most home care agencies don't lose money on the cases they turn down. They lose it on the ones they price by feel. A rate that looked fine in a phone call can run at a loss for a year once you account for overtime, payroll taxes, and the cost of replacing a caregiver who quit. Here's a repeatable way to set rates that hold up.
1. Start with your loaded cost — not the wage
The caregiver's hourly wage is only part of what an hour of care costs you. Your loaded cost includes:
- Base wage
- Employer payroll taxes (FICA, FUTA/SUTA)
- Workers' comp and general liability insurance
- Paid time off, training, and any benefits
- Overtime exposure for longer cases
Add these up and your true cost is often 15–30% above the wage. If you're billing at a fixed markup over the wage, that gap is coming straight out of your margin.
2. Price by acuity, not just hours
A companionship client and a bedbound, two-person-transfer client should not pay the same hourly rate. Define a few clear care levels — for example Standard, Complex, and Specialized — and tie each to observable conditions (dementia, fall risk, incontinence, hospice, multiple chronic conditions). Then set a rate band for each level. This keeps pricing fair, defensible to families, and consistent no matter who in your office builds the quote.
3. Build the margin in, then check it on every quote
Decide your target gross margin (many private-pay agencies aim for the 35–45% range, but use your own numbers). The point isn't the exact figure — it's that you see the margin before the quote goes out, while you can still adjust, instead of discovering it at month-end.
Tip: a simple red / amber / green band on each quote turns margin from an accounting afterthought into a decision you make in the moment.
4. Handle weekends, holidays, and live-in deliberately
These are where margin quietly leaks:
- Weekend rates — if caregivers expect a premium, your weekend bill rate must reflect it.
- Holiday pay — overtime/holiday multipliers (often 1.5×) need a matching bill rate, or you eat the difference.
- Live-in vs. hourly — live-in care is usually a daily rate with its own rules; don't shoehorn it into an hourly model.
- Couple care — two clients in one home is an add-on, not a second full rate.
5. Standardize so every quote matches
The most common pricing problem in growing agencies isn't the rate — it's that three people quote three different numbers from three versions of a spreadsheet. Put your rate card in one place, update it once, and have every quote pull from it. You'll stop underpricing, stop the awkward "the other person quoted me less" calls, and keep a record of exactly what was offered.
Common mistakes
- Marking up the wage instead of the loaded cost.
- One flat rate for every acuity level.
- No weekend/holiday differential on the bill side.
- Rates living in a spreadsheet only one person understands.
- Discounting on the phone with no view of the resulting margin.
This is exactly what we built sevaIO Rates & Quotes to do: classify acuity automatically, apply your own rate card, and show your real gross margin on every quote — in your brand, ready to send. It's part of sevaIO's home care agency software.
Price your next case with margin in view.
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