Free calculator
Billable Hourly Rate Calculator
Find the rate per billable hour that pays your earnings target and your business costs, once holidays and the hours you cannot bill — admin, sales, preparation — are taken out. Optionally compare it with the rate you charge now.
What hourly rate covers my earnings target and business costs?
Before personal income tax — not take-home pay
Software, insurance, equipment, travel, workspace — not your own earnings
Holidays, public holidays, sickness, training
All the time you work, billable or not
Admin, sales, quoting, unpaid preparation and travel
Compare it with the rate your targets need
Nothing is saved or sent anywhere.
Result
Enter your numbers
The formulas
Available weeks = 52 − weeks unavailableBillable hours a year = available weeks × (working hours − non-billable hours per week)Required revenue = earnings target + overheadRequired rate = required revenue ÷ billable hours a yearWorked example
You want 60,000 a year before personal tax and the business has 12,000 of overhead, so it needs 72,000 of revenue. You take 4 weeks off, leaving 48. You work 40 hours a week, of which 15 are non-billable, so you bill 25 hours a week: 48 × 25 = 1,200 billable hours. The required rate is 72,000 ÷ 1,200 = 60 an hour.
At a current rate of 55, those 1,200 hours bring in 66,000 — 6,000 short of the target on these assumptions.
What the result means — and what it does not
- It assumes every billable hour is sold and paid. Quiet weeks and unpaid invoices belong in the non-billable hours or weeks unavailable.
- It is not a market rate or a guaranteed price. To price a specific job from its costs, use the service pricing calculator.
- To check the margin on a price, use the profit margin calculator.
Common questions
What belongs in overhead?
Costs of running the business that are not your own pay: software and subscriptions, insurance, accountant fees, equipment and its replacement, phone and internet, workspace, marketing, training and business travel. Leave out costs you charge to clients separately, such as materials billed at cost.
Is the earnings target my take-home pay?
No. It is what the business needs to pay you before personal income tax and any personal contributions. Take-home pay is lower. Work back from the take-home amount you need with your own tax rates, or ask an accountant.
Why do leave and non-billable hours matter so much?
They are counted once each: weeks off reduce the weeks you can work, and non-billable hours reduce the hours you bill in each working week. With 4 weeks off and 15 of 40 hours non-billable, only 1,200 of 2,080 calendar hours are billable — so the rate must be far higher than earnings ÷ 2,080.
Is this the rate I should charge?
It is the lowest rate that meets your own targets if every billable hour is sold. It is not a market rate, and it does not tell you what customers will pay. Compare it with what similar services charge, and consider pricing by project if hours are hard to predict.
Does this work for freelancers and consultants?
Yes — it is the same calculation for any self-employed person or small firm that sells time. Enter your own hours and costs.