Hourly Rate Calculator

The key to quoting your clients correctly is understanding your salary expectations, overheads and your available billable hours - from this you can calculate your hourly rate. Use our handy online tool to step through your salary expectations, lifestyle, expenses and profit to calculate your hourly rate.
  • Step-by-step questions
  • Accounts for lifestyle, expenses and profit
  • Calculated hourly rate
Hourly Rate Calculator

The hourly rate calculator helps you to fully understand all your costs and overheads so that you can create a rate that will accurately reflect your salary expectations. Calculating your hourly rate properly is the starting point to getting your quotes right for your clients. In this online tool we'll walk you through:

  • Salary Expectations, Tax and Insurance
  • Lifestyle
  • Monthly Expenses
  • Profit
  • Hourly rate calculation

How it works - the calculations...

Below illustrates the calculations used by the tool to find your hourly rate, along with an example.

Salary Expectations and Tax

To start with you'll enter your salary expectation, this should be a reflection of the going rate in your market for your skill set. Once you have this you can enter a tax percentage you'll be expecting to pay. So as an example, you may wish to have a take-home salary of 35,000 and expect your tax to be around 20%.

annual salary + tax percentage = total salary
e.g. 35,000 + 20% = 42,000

Monthly Expenses

Next up you need to work out your outgoings, this will include areas such as office rent, travel, software, utilities, insurance, accounting marketing... Our tool provides all the key categories to help you.

For this example let's say you have 1330 of expenses per month totalling 15,960 per year.

total salary + expenses = total required income
42,000 + 15,960 = 57,960

Lifestyle

In the lifestyle section you can define the time you have available to generate this revenue, specifically covering the following questions:

  • Working days per week?
  • Hours working per day?
  • Holiday days per year?
  • Sick days per year?

If you were intending to work 5 days per week, 8 hours per day, with 20 days holiday per year allowing for 5 sick days this would give the following calculation:

52 x working days per week - annual holiday - sick days = total working days
total working days x working hours per day = total working hours
52 x 5 - 20 - 5 = 235
235 x 8 = 1,880

This gives us 1,880 hours per year to earn 57,960, but we also need to take into account the time required for admin work and other tasks, i.e. non-billable time. This is provided as a percentage, for example you might expect to have 30% non billable time to give the following:

hours per year - non billable percentage = billable hours
1,880 - 30% = 1,316

Profit

Next up is profit - on top of your salary how much profit do you want to make? You can set this to zero if your salary is your required outcome, however you may wish to add 10 - 20% profit as well. This would give:

total required income + profit = total income
57,960 + 20% = 69,552

Hourly rate calculation

Finally with the above calculations this would come to:

total income / billable hours = hourly rate
69,552 / 1,316 = 52.85

This gives you an hourly rate of 53 per hour rounded up. Try out the tool today to get your hourly rate.

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