Hourly rate calculator

How the calculation works

The rate falls out of four things: what you want to earn, what the business costs you to run, how many hours you actually work, and how many of those hours you can put on an invoice.

Start with the weeks. Fifty-two, less the weeks you take off for holiday, public holidays and sickness. Multiply the remainder by your working hours per week to get the hours you are at work.

Then take the share of those you can bill. This is the number people get wrong, because the unbillable hours are real work — quoting, invoicing, chasing late payers, bookkeeping, finding the next job. They just do not appear on an invoice.

Finally, add your income target to your annual business costs and divide by the billable hours. That is the rate at which the year balances.

What this figure does not include

The income you enter is before tax, so treat the result as revenue rather than take-home pay. It also assumes you fill every billable hour you have planned for. If your work is seasonal or arrives in bursts, either lower the billable share or treat the result as a minimum.

Common questions

Why is my rate so much higher than a salary equivalent?

Because it is covering more. A salaried hour is paid whether or not it is billable, and the employer absorbs holiday, sick leave, equipment, insurance and downtime between work. Billing on your own, all of that comes out of the hours you actually invoice, which is why dividing a target salary by 2,080 hours produces a rate that leaves you short.

What share of my hours can I realistically bill?

Most people who bill their own time land somewhere between 60% and 75%. The rest disappears into quoting, invoicing, chasing payment, admin, marketing and the gaps between jobs. If you have never measured it, start at 65% rather than assuming you will bill everything.

Should I set my rate from my costs or from the market?

Use both. The figure this calculator produces is your floor — the rate at which the year works out. What the market will pay is a separate question, and if the floor sits above it then the problem is the cost base, the utilisation, or the type of work, not the arithmetic.