Know the Figures

Billable Rate Calculator

The hourly rate that actually pays you what you meant to earn.

Replaces: Consultants’ pricing courses and agency rate cards

How to use it

Work backwards from what you need rather than forwards from what competitors charge. Enter the income you want, the costs of running the business, and how many of your hours are genuinely billable. The rate falls out of that arithmetic.

Where the number comes from

  • Revenue needed is your target income plus business costs, plus the profit you want on top as a markup on those costs. A markup is not a margin: 10% on top leaves profit at about 9% of revenue.
  • Total hours are weeks worked times hours per week — after holiday and time off, not the calendar year.
  • Billable hours are total hours times utilisation. The rest goes on selling, admin, invoicing and everything else nobody pays for.
  • The hourly rate is revenue needed divided by billable hours only.
  • The effective rate spreads the same revenue across every hour you actually work, which is the honest comparison against a salaried job.

What goes wrong

The part most calculators leave out.

  • Utilisation is the input people get most wrong, almost always upward. Sixty per cent is realistic for an established independent; new ones frequently sit near forty while they are still finding work.
  • This calculates a rate that covers your costs. It says nothing about what the market will pay, and a rate the market rejects is not a rate.
  • Personal tax is not modelled. The target income here is pre-tax to you, so the amount reaching your account is lower — sometimes much lower depending on your structure and jurisdiction.
  • Unpaid time off is already priced through weeks worked, but only if you were honest about it. Assuming 50 working weeks and then taking four off makes every figure here wrong.
  • Late payment and bad debt are not modelled. A rate that works at 100% collection does not work at 90%.
  • Fixed-price work breaks the model entirely. If you quote projects rather than hours, use this to find your floor, then price on value.

Why the day rate has to look high

An independent consultant wants 90,000 of income, spends 14,000 running the business, and wants 10% on top of that as profit — a markup, so 114,400 of revenue. They work 46 weeks at 40 hours, so 1,840 hours a year, but only 60% is billable: 1,104 hours. The rate is about 104 an hour, or 829 a day. Against a salary that sounds enormous, until you notice the effective rate across every hour actually worked is 62. Push utilisation to 80% and the same income needs only 78 an hour — which is why the most valuable thing an independent can fix is usually not the rate but the pipeline.

Questions

What utilisation rate should I assume?
Sixty per cent is a reasonable planning figure for an established independent. Agencies often target 70–75% for delivery staff. If you are starting out, assume lower and be pleased to be wrong.
Should I compare my rate to a salary?
Compare the effective rate, not the billable rate. The billable rate covers unbillable hours, business costs, holiday, sick leave, pension and the risk of gaps — none of which a salaried employee pays for out of their hourly equivalent.
Why add profit on top if I am the business?
Because a business that runs at exactly cost cannot absorb a bad quarter, invest in anything, or take time off unpaid. That profit is what makes it a business rather than a job with worse benefits.
Does anything I type get sent anywhere?
No. The whole calculation runs in your browser. Nothing is sent to us or logged, and there is no account to create. Your browser keeps the figures with this tab’s history so that Back and Reload bring them back, and Reset clears them.

Last updated .

Put this calculator on your site

Free to embed, on any site, commercial or not. No sign-up and no tracking script — the calculator runs in your reader’s browser exactly as it does here. All we ask is that you keep the credit line.

HTML

The small script resizes the frame as the reader changes inputs. Drop it if your CMS strips scripts — the calculator still works, it will just stay at a fixed height. The calculator is light by default; on a dark site, end the src with ?theme=dark, or ?theme=auto to follow each reader’s device.

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