What to Charge for Home Care: A Pricing Guide for New Agencies

Updated July 2026 · 6-minute read

New agency owners set their rate one of two ways. Most call three competitors, undercut the lowest by a dollar, and hope. The ones who survive build the rate from their actual costs and defend it. This guide walks through the second method — it takes ten minutes, and if you'd rather not do the arithmetic by hand, our free rate calculator does it for you.

Context: this is private-pay pricing for non-medical home care — companion and personal care, medication reminders only, never administration. In 2026, private-pay rates across US markets run roughly $28–$45 per hour, with rural Southern markets near the bottom and coastal metros above the top. Your market sits somewhere in that band; your costs decide where you sit inside your market.

Cost-up pricing in four steps

1. Start with the caregiver wage. The wage you actually need to pay to attract someone reliable in your market — a dollar or two above the local floor, not the minimum you can get away with.
2. Add payroll burden: 12–20%. Employer payroll taxes, workers' comp, unemployment insurance, and any paid time off. This is money that leaves your account for every hour worked, whether you priced for it or not.
3. Add overhead per billable hour. Total your monthly fixed costs — insurance, phone, software, mileage, marketing, your own admin time — and divide by the billable hours you actually deliver in a month. New agencies often find this is $3–$6 per hour. It shrinks as you grow, but price for today's volume, not your dream volume.
4. Apply a real margin: 25–35%. Not on top of the wage — on top of the whole loaded cost. This margin is not greed; it's the fund that absorbs everything below.

Worked loosely: an $18 wage becomes about $21 loaded at 15% burden, plus $4.50 overhead is $25.50 in cost per billable hour, and a 30% margin lands you around $36–$37 — squarely inside the typical band. Plug your own numbers into the rate calculator and you'll have a defensible number in two minutes.

Why underpricing kills agencies

The margin isn't profit you pocket every week. It's what pays for the caregiver who no-shows on a Saturday (you cover the shift or pay overtime to whoever will), the client who cancels inside the notice window, the overtime week when two clients go to 24-hour care at once, the bad-debt invoice, and the recruiting cycle when someone quits. An agency billing at cost-plus-10% has no cushion for any of that — one rough month and it's funding operations from the owner's savings. Thin pricing also traps you into paying thin wages, which buys you the least reliable caregivers and more of the very no-shows you can't afford. It's a spiral, and it starts with a rate set from fear. (Underpricing also stretches the startup budget problems covered in our startup cost breakdown — thin margins mean you need a bigger cash cushion, not a smaller one.)

Set a minimum visit length

A one-hour visit that takes your caregiver thirty minutes of driving each way is a money-loser at any rate, and caregivers won't keep accepting those shifts anyway. Most agencies set a 3- or 4-hour minimum per visit; some offer a shorter minimum at a higher hourly rate for check-in visits. Whatever you choose, put it in the service agreement and hold it — the client who negotiates away your minimum in week one will negotiate everything else too.

Premium pricing: overnights, 24-hour, holidays

• Overnight shifts are usually either hourly at your standard-or-higher rate (awake overnight) or a discounted flat shift rate if the caregiver may sleep. Know your state's wage rules for sleep time before offering the flat version.
• 24-hour care is typically quoted as a daily flat rate built from two or three shifts. Never quote it as "we'll figure it out" — build it from wages and burden like everything else.
• Holidays are commonly billed at 1.5x your standard rate, because you'll be paying caregivers time-and-a-half (or a strong holiday premium) to work Thanksgiving. List the specific holidays in your rate schedule so nobody is surprised in November.

Service types and how they're typically structured

Raising rates on existing clients

You will need to raise rates — wages, insurance, and workers' comp all drift upward, and an annual increase of a few percent is normal in this industry. Do it in writing, with 30–60 days' notice, once a year at most, and with a one-sentence reason ("caregiver wage and insurance costs have increased"). Send a short, respectful notice letter; don't apologize for three paragraphs and don't spring it on the invoice. Families accept predictable, well-communicated increases far better than owners expect — what they punish is surprise. Make sure your service agreement includes a rate-change clause with a notice period from day one, so the increase is a routine letter instead of a renegotiation. (A rate-increase notice letter is one of the 32 forms on our checklist for exactly this reason.)

Pricing is step six of the larger launch sequence — if you're earlier in the process, the full walkthrough is in How to Start a Non-Medical Home Care Business. And whatever you do, run your numbers before you print a rate sheet: ten minutes with the calculator beats a year of working for free.

This article is general information for the United States, not legal, tax, or financial advice. Home care requirements vary by state and change over time — confirm details with your state licensing authority and a qualified attorney.