How to use it
Enter the salary you would want from a full-time job. Then add what an employer would have paid on top: health cover, retirement and payroll taxes. Add your business costs, the weeks you will not work, and how many hours a week you can actually bill. The tool works in any currency.
The formula
- Revenue needed = (salary × (1 + benefits %) + business costs) × (1 + profit margin)
- Billable hours = (52 − weeks off) × billable hours per week
- Hourly rate = revenue needed ÷ billable hours
Example: an 80,000 salary, 30% for benefits, 6,000 of costs, 6 weeks off, 30 billable hours a week and a 10% margin.
- Revenue needed: (80,000 × 1.3 + 6,000) × 1.1 = 121,000
- Billable hours: 46 × 30 = 1,380
- Hourly rate: 121,000 ÷ 1,380 = 87.68
An employee on 80,000 earns about 38.46 an hour, so the contractor rate is 2.3 times that.
Common questions
Why is my contractor rate so much higher than my salary?
As a contractor you pay for your own time off, equipment, insurance and retirement, and you cannot bill every hour you work. Admin, sales and finding the next client take time. A common rule of thumb is to charge 1.5 to 2 times the hourly pay of the same job as an employee.
How many hours can I really bill?
Most freelancers bill 20 to 30 hours in a 40-hour week. Plan for fewer when you are starting out.
Should I charge by the hour or by the project?
Hourly is safer when the work is unclear. A project price rewards you for working fast. Use this hourly rate to price a project: estimate the hours, then add a buffer.
Last checked: 2026-09-26