Hourly Billing Rate Calculator
The hourly rate you need to charge to pay yourself, cover your expenses, and make a profit — once you account for the hours you can't bill and the invoices that don't get paid in full.
Ben / Reviewed Sep 27, 2026 / v2.0.0
Results
Showing the numbers you calculated- Hourly rate you need
- $163.45
- Round up to $165
- Day rate
- $1,307.60
- One full working day
- Break-even rate
- $134.85
- Covers pay and expenses, no profit
- Billable hours a year
- 1,288
- Of 1,840 working hours
- Amount to bill
- $210,526.32
- $200,000.00 collected after write-offs
Rate at other billable shares
The same year, billed across more or fewer hours.
| Billable share | Billable hours | Rate needed |
|---|---|---|
| 50.00% | 920 | $228.83 |
| 60.00% | 1,104 | $190.69 |
| 70.00% | 1,288 | $163.45 |
| 80.00% | 1,472 | $143.02 |
| 90.00% | 1,656 | $127.13 |
What this does
The classic freelancer mistake: take the salary you want, divide by 2,080 hours, and call that your rate. You can't bill 2,080 hours — and your rate has to pay for the business too.
This works backward from what the year has to cover, through the hours you can actually bill and the invoices that come in short, to the rate you need.
How the math works
billable hours = (52 − weeks off) × hours per week × billable share
Then gross up what you need for write-offs, and spread it over those hours:
amount to bill = (pay + expenses + profit) ÷ (1 − write-off rate) rate = amount to bill ÷ billable hours
The billable share matters most. Going from 70% to 50% billable raises the rate you need by 40%.
Check my math: a worked example
$120,000 of pay, $45,000 of expenses, and $35,000 of profit.
- Working hours: (52 − 6) × 40 = 1,840. At 70% billable, that's 1,288 billable hours.
- To collect $200,000.00 after 5% write-offs, you bill $210,526.32.
- Rate: $210,526.32 ÷ 1,288 hours = $163.45 — call it $165 an hour, or $1,307.60 a day.
- Just to break even (no profit): $134.85 an hour.
These numbers come straight from the calculator using its example inputs — if the math ever changes, this example changes with it.
Mistakes I see a lot
- Dividing by 2,080. Nobody bills every hour of a 40-hour week, 52 weeks a year.
- Forgetting the business expenses — and the self-employment tax on your pay.
- Pricing like an employee. Your rate has to cover the benefits, time off, and slow months an employer would.
- Never raising it. Revisit the rate every year, and when you're booked solid.
Questions people ask
- Should I charge hourly at all?
- Hourly is the easiest to start with, but it caps what you earn. Once you know your rate, a flat project price or monthly retainer built on it usually works better for both sides.
- What's a realistic billable share?
- For solo consultants and freelancers, 60–75% of working time is common. Agencies with dedicated sales and admin staff can push individual billers higher.
- How does this compare to a salary?
- A contractor rate usually needs to be 1.5–2× the hourly pay of an employee doing the same work, to cover taxes, benefits, downtime, and expenses. The Salary to Contractor calculator runs that comparison.
Assumptions and limits
- Working hours = (52 − weeks off) × hours per week. Billable hours = working hours × the billable share.
- What you bill has to cover write-offs and discounts: amount to bill = (pay + expenses + profit) ÷ (1 − write-off rate).
- Rate = amount to bill ÷ billable hours. The break-even rate leaves out the profit.
- "What you pay yourself" is before income tax. As a sole proprietor, set aside self-employment tax out of it or add it to expenses.
- The day rate is the hourly rate × hours per day (hours per week ÷ 5). The suggested price rounds up to the next $5.
Disclaimer: Educational and planning use only. Results depend on what you enter and may not match your lender, your tax return, or professional accounting treatment. Informational content + opinions only — not tax/legal advice.