Turn your income goal and business costs into a sustainable hourly contractor rate. The calculation allows for realistic billable capacity.
An $80,000 income target plus $15,000 overhead across 46 weeks at 25 billable hours per week requires $82.61 per hour before a risk buffer, or $95.00 per hour with a 15% buffer.
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Hourly rate = (target income + annual overhead) ÷ annual billable hours × (1 + buffer). Annual billable hours equal billable weeks multiplied by billable hours per week. Administration, sales, bookkeeping, vacation and gaps reduce billable capacity.
Add target pay and annual business overhead, divide by realistic billable hours, then add a profit and risk buffer.
Freelancers cannot bill every working hour. Administration, sales, bookkeeping, vacation and gaps reduce billable capacity.
The target income should support personal tax obligations, while business overhead and profit are handled separately. Sales tax is normally added where required.
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General information only; reviewed August 2026.