Contractor Rate Calculator

How It Works

This calculator works backward from the income you want to take home. Enter your target annual income, your estimated annual business overhead (taxes, insurance, software, equipment, and other costs), and how many hours you realistically expect to bill in a year, and it calculates the hourly rate you'd need to charge to cover it all.

Formula

Your target hourly rate is calculated as:

• Desired Income — the annual take-home pay you want to earn
• Overhead — annual business costs like self-employment taxes, insurance, software, and equipment
• Billable Hours — the number of hours per year you expect to actually bill clients

Example

Say you want to earn $80,000 a year, expect $10,000 in annual overhead, and plan to bill 1,200 hours:

• Total needed: $80,000 + $10,000 = $90,000
• Billable hours: 1,200
• Target hourly rate: ≈ $75.00/hour

Assumptions & Limitations

This calculator provides a baseline rate based on the numbers you enter. It doesn't account for market rates in your industry, client budgets, or competitive positioning — you may need to adjust up or down based on demand and experience. Results are estimates for educational purposes only.

Frequently Asked Questions

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