Billable Hour Rate
Calculator
Results
- Billable hourly rate
- 166.666666
- Break-even hourly rate
- 133.333333
- Annual billings
- 200,000
Results
| Billable hourly rate | 166.666666 |
| Break-even hourly rate | 133.333333 |
| Annual billings | 200,000 |
formula-map diagram
- Billable hourly rate
- 166.666666
- Break-even hourly rate
- 133.333333
- Annual billings
- 200,000
Formula breakdown
Formula
Rate = (Target income + Overhead) ÷ Billable hours ÷ (1 − Margin%)= 166.66666666667
Note
This is a simplified model. Results use standard textbook definitions and ignore taxes, seasonality, attribution lag, discounting and accounting policy differences. Use them as an estimate, not as accounting, tax or investment advice.
More in Business and marketing
See all →Frequently asked questions
How is a billable hour rate calculated?+
Billable hour rate = (total costs + desired profit) / total billable hours available in a period. It's designed to ensure that after accounting for all business expenses, the rate charged per hour still leaves the target profit margin.
Why isn't a billable rate simply based on desired annual salary divided by total working hours?+
Dividing salary by total hours ignores non-billable time (admin work, marketing, unpaid downtime), overhead costs, and taxes, all of which must be recovered through the hours that are actually billed to clients — using total hours instead of billable hours understates the rate needed.
What's a realistic percentage of working hours that are actually billable?+
Many freelancers and consultants can only bill 60-80% of their total working hours, since time spent on administration, business development, and unpaid tasks isn't billable; a lower billable percentage means each billable hour needs to be priced higher to cover the same total costs.
How do overhead costs factor into setting a billable rate?+
Overhead costs — software subscriptions, office space, insurance, equipment — need to be divided across your billable hours and added into the rate, since a rate based only on salary and profit target would leave these business costs unfunded.
Should billable rate differ based on the type of work or client?+
Many professionals do vary rates by project complexity, urgency, or client type, since specialized or rush work often commands a premium; a single flat billable rate might undercharge for high-value work and overcharge for simpler tasks.