Calculate your contract hourly rate — also called your billable rate or charge-out rate — from your target salary, annual overhead, and realistic billable hours. Most contractors find their true break-even rate is 2–3× their wage once insurance, vehicle costs, tools, unbillable time, and taxes are factored in.
Enter your target annual net salary, total annual business overhead (insurance, vehicle, tools, software, licenses), billable hours per week, and working weeks per year. The calculator divides total costs by total billable hours to give your minimum viable contract hourly rate. Add 10–20% for profit on top of that break-even figure.
The most common mistake is pricing against competitors rather than against actual costs. Once you count unbillable time (admin, travel, quoting), self-employment tax (15.3% in the US), vehicle depreciation, and tool replacement, the true break-even rate is typically $20–$40/hr higher than contractors initially assume.
Charge-out rate, billable rate, and contract hourly rate all mean the same thing: the amount on your invoice per hour of work. The term charge-out rate is common in Australia, New Zealand, and the UK. US contractors say billable rate. Both must cover wages, overhead, taxes, and profit — this calculator gives you that number regardless of which term you use.
Most trade contractors can only bill 25–30 hours per week out of a 40–50 hour workweek. The rest goes to estimates, admin, travel, and marketing. Use your realistic billable hours — not your total hours — as the input. Overestimating billable hours is the second most common reason contractors set rates too low.