Business

Contractor Hourly Rate Calculator

Estimate the hourly rate needed to cover income, overhead, taxes, and billable time.

MyToolPantry.comContractor Hourly Rate Calculator

Contractor Hourly Rate Calculator result

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Desired annual after-tax income ($)Annual business overhead ($)Estimated tax rate (%)Profit or contingency margin (%)Working weeks per yearAvailable hours per weekBillable utilization (%)Uncollected or unpaid billable time (%)Lead close rate (%)

Required annual revenue$153,333.33Collectible billable hours1,136.2Minimum hourly rate$134.95Minimum day rate (8 hours)$1,079.62Monthly revenue capacity$12,777.7820-hour projects needed monthly4.7Qualified leads needed monthly15.8

Capacity separates working time, billable utilization and collection loss. Lead demand assumes 20-hour projects and the entered close rate. This is planning, not tax advice or a market quote.

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How this tool works

The calculator grosses the desired after-tax personal income up by the entered tax-rate assumption, adds annual business overhead, applies a separate revenue-margin contingency, and divides required revenue by billable hours.

Assumptions

Desired personal income is after the entered tax-rate assumption; business overhead is added separately; the contingency is a margin on revenue; billable hours exclude nonbillable work.

Limits to know

The estimate assumes the entered billable hours are actually invoiced and collected. Taxes, insurance, unpaid administration, utilization, market pricing, and late payment can require a higher rate.