How to use the contractor rate calculator
Prepare the values for this calculation
Estimate a billable hourly rate from target income, overhead, billable hours, and margin. Use the formula below to check that it answers your question. Read the input units before transferring figures from a statement, measurement or dataset.
Enter and check each input
- Target annual income: enter a value at least 0. Use the unit named in the label or selected above. Do not leave this required field blank.
- Annual overhead: enter a value at least 0. Use the unit named in the label or selected above. Do not leave this required field blank.
- Annual billable hours: enter a value at least 1e-06. Use the unit named in the label or selected above. Do not leave this required field blank.
- Target profit margin (%): enter a value at least 0 and no more than 99.9. Use the unit named in the label or selected above. Do not leave this required field blank.
The input table gives a complete example. Keep units and time periods consistent across related fields.
Calculate and resolve any input error
Choose Calculate after entering the values. Changes also update the answer after a short pause. If an error appears, follow its message, correct the field and calculate again. Reset restores the example values.
Interpret the answer
Check Required hourly rate first. With the unchanged example inputs, it is $112.75. Interpret it using the formula and assumptions on this page.
Compare and keep a useful result
For a controlled comparison, keep every other example input unchanged and change Target annual income from 90000 to 99000. The resulting Required hourly rate is $121.57. This illustrates the equation’s response to that input, rather than a forecast of real events.
Read the chart’s axis labels and data table. A scenario curve changes one stated input while holding the others fixed; it does not add external observations. Use Download graph to save an available chart as a PNG.
Use Copy result or Download CSV to keep the answer. Share tool shares the page address without placing your input values in the URL. Recheck inputs and assumptions before using the result for a decision.
Contractor Rate Calculator formula
Required rate=(target income+overhead)/[billable hours×(1−margin)].
Inputs and units
| Input | Format / range | Example |
|---|---|---|
| Target annual income | minimum 0 | 90000 |
| Annual overhead | minimum 0 | 25000 |
| Annual billable hours | minimum 1e-06 | 1200 |
| Target profit margin (%) | minimum 0; maximum 99.9 | 15 |
Worked example
Using the example inputs above, the required hourly rate is $112.75.
- Required hourly rate
- $112.75
Results and assumptions
The output uses the required hourly rate convention and formula shown above. Match the entered units and source assumptions when comparing results.
Rates, fees and tax assumptions are entered values. This calculation does not quote a lender, determine a tax liability or guarantee an investment return.
Fix an input or unexpected result
Target annual income is required. Enter target annual income using the format and bounds in the input table. Zero and an empty field are different: use zero only if it is allowed and represents your data.
If your answer differs from the example, choose Reset and compare every field, including selected units and options. Check percentage versus decimal entry and whether values describe the same period. Round only the final displayed answer when reproducing the formula.
If a discrepancy remains, report the calculator issue with the page address, non-sensitive example inputs, actual result, expected result and a reference for your calculation.