Contractor Hourly Rate Calculator Guide

Start with your target annual income, add your business overhead for the year, then divide by the number of hours you can actually bill — not your total working hours. Most contractors overestimate billable hours because they forget that driving, estimating, admin work, and callbacks all eat into the day without generating billable time.

If you work a 2,080-hour year (40 hours x 52 weeks), a realistic billable share is often 60-75% once you subtract drive time, estimating, paperwork, and slow weeks — so 1,250-1,560 billable hours is a more honest planning number than the full 2,080. Using the full number will always price you too low.

Say you want $80,000 in personal income, your business overhead is $30,000 a year, and you can realistically bill 1,400 hours: ($80,000 + $30,000) / 1,400 = about $79/hour just to hit that target, before profit. Add your target profit margin on top of that to get your actual bill rate. Our Hourly Rate Calculator runs this exact formula so you can adjust each input and see the rate move in real time.