Hourly Rate Calculator
The Hourly Rate Calculator helps freelancers, contractors and small business owners set a charge rate that actually pays the bills. Many people pick a number that sounds reasonable, then wonder why the year falls short. This tool works backwards from what you need. You enter the income you want to take home before tax, the annual business costs you have to cover, and the number of hours you can realistically bill in a year. It adds your target income and costs together, then divides by your billable hours to give the rate you must charge on every billable hour to reach your goal. The key insight is that you cannot bill every working hour. Time goes to admin, marketing, quoting, training and unpaid gaps, so your billable hours are always lower than the hours you work. Costs matter too, since tools, insurance, accounting, devices and a workspace all come out before you earn a cent. By making these numbers explicit you avoid setting a rate that quietly loses money. It suits anyone who sells time, from tradespeople and consultants to designers and coaches. Good practice is to be honest about billable hours, because optimism here is the most common reason rates end up too low. Build your real costs in fully rather than guessing, and add a margin for slow periods and the unexpected. Review the rate at least once a year as your costs and demand change. Treat the figure as a floor to protect, then price above it where the market and your value allow.
Rate = (target income + costs) / billable hours. Day rate is 8 billable hours. Estimate only, not financial or tax advice.
How it works
The calculator adds your target income to your annual business costs to find the total you must earn. It then divides that total by your billable hours for the year to give the rate per hour. The day rate multiplies the hourly rate by eight billable hours.
Worked example
A $90,000 target plus $20,000 of costs means you must earn $110,000. Spread over 1,200 billable hours, that is $91.67 per hour. At eight billable hours a day, the day rate is $733.33.
Related calculators
- Billable Hours Calculator: revenue from billed time.
- Utilisation Rate Calculator: share of time billed.
- True Employee Cost Calculator: full cost of a role.