Calculator
What should you charge per hour?
This calculator shows the hourly and day rate you need to reach a yearly income and cover your business costs, using only the hours you can bill.
The income is before tax. The calculator does not work out tax, so the rate covers only the income and costs you enter. Taxes are your own line to add.
Software, insurance, equipment, a phone, travel. Add them up and enter the total.
For example, 48 leaves four weeks for holidays and sick days.
For example, 40.
The rest goes to finding work, admin, and travel. For example, 60.
- Total to cover per year
- Unanswered
- Billable hours per year
- Unanswered
- Hourly rate needed
- Unanswered
- Day rate (8 hours)
- Unanswered
Enter all five numbers to see the rate. Zero counts as an answer.
Billable hours = weeks × hours per week × billable share.
Hourly rate = (income + business costs) ÷ billable hours, rounded up to the cent.
Day rate = hourly rate × 8.
How it works
First, the calculator finds how many hours a year you can actually charge for. Then it divides everything you need to bring in by those hours.
billable hours = weeks × hours per week × billable sharehourly rate = (income + business costs) ÷ billable hoursday rate = hourly rate × 8
The hourly rate rounds up to the cent, so charging it for every billable hour covers the full amount.
A worked example
Someone starting a consulting practice from a laptop wants $60,000 a year before tax. Software, insurance, a phone plan, and a laptop fund add up to $6,000 a year. They plan to work 48 weeks of 40 hours and expect to bill 60% of that time.
Billable hours are 48 × 40 × 0.60 = 1,152. The rate is ($60,000 + $6,000) ÷ 1,152 = $57.30 an hour, rounded up. The day rate is $458.40. These are illustrative numbers, not typical rates.
Common questions
Does this include taxes?
No. The income you enter is before tax, and nothing is set aside for income or self-employment tax. If you know what you want to set aside, add it to the income or the yearly costs.
Why not count every working hour as billable?
Part of every week goes to finding clients, writing proposals, invoicing, travel, and keeping your skills current. Nobody pays for those hours directly, so the hours you do bill have to cover them.
Should I charge by the hour or by the project?
Either can work. The hourly rate is a floor: if you quote a project, estimate the hours it takes and check the price against this rate.
What if the rate is more than clients will pay?
Then something in the inputs has to change: lower costs, more billable time, a smaller income target to start, or a different offer. Cutting the rate without changing anything else means you do not reach the income you entered.
For how to choose and explain your rate, read How to set your hourly rate.