Billing Rate Calculator

How it is calculated

rate = (target salary / billable hours) × (1 + overhead% / 100) × (1 + profit% / 100). Target salary is the income you want for the year, billable hours is how many hours you can actually invoice in that year, and overhead and profit are percentages. Overhead and profit are optional and count as 0 if left empty. The result is an hourly rate in dollars.

The two percentages are applied one after another, as multipliers, not added together: 25% overhead and 20% profit raise the base rate by a factor of 1.25 × 1.20 = 1.50, not 1.45. Billable hours must be above zero and the other values cannot be negative. Taxes are not calculated separately, so if your target is after tax, include them in the salary or overhead.

Common mistakes

• Using 2,080 (full-time working hours) as billable hours: that is all working hours, while time for admin, sales, holidays and sick days is not billable, so the rate comes out too low.
• Entering overhead as an amount instead of a percentage: the field is a percentage of the base rate, so 25 means 25%.
• Adding the percentages (25% + 20% = 45%) when checking by hand: the tool multiplies them, giving a 50% total uplift.
• Treating the result as the price for every client: it is the minimum to reach the target, and fixed-price jobs or a client's budget may differ.