Profitability & pricing

Freelance and consulting hourly rate calculator

Your rate is not your salary divided by 2,080 hours. Non-billable time, unpaid leave and business overheads mean the true break-even rate is usually 60-90% higher than people assume.

Inputs

Result

Required hourly rate

USD 163.46

Billable hours per year
1,196
Break-even rate (no profit margin)
USD 142.14
Day rate (7.5 hours)
USD 1,225.95
Annual billings required
USD 195,500
Effective rate across all hours
USD 106.25
  • Every 5 points of utilisation you recover is worth more than most price rises.

How to use this calculator

  1. 1Enter the income you want to take home before tax.
  2. 2Add annual business costs and the profit margin you want on top.
  3. 3Set working weeks, hours per week and realistic billable utilisation.

Billable utilisation is the hidden variable

Sales, admin, proposals and training rarely fall below 30% of a working week. At 65% utilisation you bill roughly 1,200 hours a year, not 2,000, and every rate calculation must start there.

Raising utilisation is often easier than raising rates: moving from 55% to 65% is a 18% revenue increase at the same price.

Costs to include before you set a rate

Software, insurance, accounting, devices, professional development, superannuation or retirement contributions, and a provision for tax. Add a profit margin on top — the business should earn more than the operator's wage.

If you plan to sell the practice one day, price so that a replacement operator could be paid market salary and the business would still be profitable. That surplus is what a buyer values.

Call this tool from the API

Every calculator on this site is also an endpoint. Get a free key from the developer page and call it from your product, spreadsheet or AI agent.

curl -X POST https://utopiavalue.co/api/v1/tools/hourly-rate-calculator \
  -H "Authorization: Bearer $UTOPIA_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{"targetIncome":140000,"annualCosts":30000,"weeksWorked":46,"hoursPerWeek":40,"billablePercent":65,"profitMarginPercent":15,"currency":"USD"}'

Frequently asked questions

Should I quote hourly or fixed price?

Use this rate as your internal floor, then quote fixed prices against estimated hours. Fixed pricing rewards efficiency; hourly billing penalises it.

What utilisation should I assume?

Solo consultants realistically achieve 55-70%. Agencies staffing delivery teams plan 70-80% for delivery staff and much lower for principals.

Does this include tax?

Target income here is pre-tax. Add your expected tax rate into business costs if you want the rate to fund the tax bill as well.