Consulting rate calculator
This free consulting rate calculator turns a target income into the hourly, day and retainer rate you should charge. Enter your income goal, time off, billable hours and overhead, or switch to salary mode to convert a salary into a contract rate. It updates as you type, and nothing is sent anywhere.
What you want to keep after business costs, before your own income tax.
The share of working hours a client actually pays for. Most consultants land between 50 and 70 percent once admin, sales and downtime come off.
Software, insurance, hardware, accounting, memberships: the yearly cost of running the business.
Estimate. Check your own rate.
$157 / hr
recommended hourly, from 1104 h billable a year at 60% utilization.
$114
covers income and overhead only
$1,255
at 8 h a day
$3,766
billable hours in a week
$14,438
full-utilization equivalent
$188
$157
$135
The same income target needs a higher rate when fewer of your hours are billable. This is the number people guess, and guess high.
How the consulting rate calculator works
billable hours / year = working hours per week × working weeks × utilization
break-even hourly = (target income + annual overhead) ÷ billable hours
recommended hourly = break-even × (1 + tax buffer) × (1 + profit margin)
day rate = recommended hourly × hours per day
example: $120,000 target, 1,000 billable hours → $120 break-even, then buffers on top
How to calculate a consulting rate
Add your target annual income and yearly business expenses, then divide by the hours you can realistically bill in a year. If you want $120,000 and can bill 1,000 hours, your break-even rate is $120 an hour. Add a buffer for taxes and a margin for profit, then round to a confident number.
The break-even is the floor: the rate that only covers your income and overhead, with nothing left for tax or profit. Charging the break-even means working for a wash the moment a tax bill or a slow month arrives. The recommended rate above marks the break-even up by a tax buffer and a profit margin you set, so the number you quote is the number that keeps the business running.
Salary to contract rate conversion
Going independent, the instinct is to divide a salary by 2,080 hours and quote that. It is always too low. A salary hid the cost of the benefits and the employer payroll taxes your employer paid on top, and it assumed you were paid 52 weeks a year with none of the gaps contract work has. The conversion mode above loads the salary with those costs, then divides by the hours you actually expect to bill, which is the honest equivalent.
It is also the answer to the reverse question, an hourly rate to salary calculator run backwards: a contract rate has to out-earn the salary it replaces, not match it, because you now carry what the employer used to.
Utilization: the number everyone gets wrong
Utilization is the share of your working hours that a client actually pays for. It is the single input that moves the rate most, and almost everyone sets it too high. A 40-hour week is not 40 billable hours: sales calls, proposals, admin, invoicing, bookkeeping and learning all take real time that no client is billed for.
Plan from somewhere in the 50 to 70 percent band unless you have measured otherwise. Billable utilization rate has the full working and the sources, and how many billable hours in a year turns a utilization figure into the annual hours this calculator divides by. Set it from a real measurement, not a hope, or every rate below it is wrong.
Hourly, day rate or retainer
The calculator gives you all three because they suit different work. An hourly rate fits short or open-ended tasks where the scope is not fixed. A day rate fits work booked in whole days, and it stops you nickel-and-diming half hours. A monthly retainer fits an ongoing relationship: the client buys a block of your time each month, and you get predictable income instead of chasing new work every few weeks.
Whatever you quote, it should trace back to the same annual number. The retainer above is simply your recommended rate times the billable hours a month, so a discount on the retainer is a discount on the rate, made visible.
Know your real utilization before you set the rate
Every rate on this page hangs off one number you have to measure rather than guess: how much of your week is actually billable. BillNotch records your working day in the background and sorts it into client projects, so the billable share is a figure you read off, not one you hope is right.
After a month you can compare the utilization you assumed here against the utilization you actually hit, and reset the rate on real data. BillNotch for consultants covers how passive capture, per-project rates and the revenue leak finder fit an independent practice.
Related tools
- Billable hours calculator shows what your billable hours are worth once you have a rate.
- Hours to decimal converter turns 7:30 into 7.5 for billing math.
- Invoice generator puts the rate onto a downloadable invoice PDF.
- Revenue leak calculator models the billable time that never gets billed.
Cite or embed this calculator
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Consulting Rate Calculator, BillNotch, billnotch.com/tools/consulting-rate-calculatorThis tool is free to link to from anywhere, with attribution to BillNotch.
Consulting rate calculator FAQ
- How do I calculate my consulting rate?
- Add your target annual income and yearly business expenses, then divide by the hours you can realistically bill in a year. If you want $100,000, have $20,000 in expenses, and bill 1,000 hours, your rate is 120,000 divided by 1,000, which is $120 an hour. Add a buffer for taxes and profit.
- How many hours a year can a consultant bill?
- Fewer than a full-time schedule suggests. After vacation, holidays, sick days, admin, sales, and marketing, many consultants bill only about half to two-thirds of their working hours. If you work 2,000 hours but bill 60 percent, that is 1,200 billable hours, and your rate must cover the whole year from those hours.
- How do I convert a salary to a contract rate?
- Start with the salary, add the costs an employer used to cover, health insurance, retirement, and payroll taxes, then divide by the hours you expect to bill in a year. Contract work has gaps, so use billable weeks and a realistic utilization, not a full 2,080 hours. The result is your target contract rate.
- Should my consulting rate include taxes?
- Yes. As a contractor you pay self-employment tax and income tax yourself, and no employer withholds them. Build these into the rate rather than treating your quote as take-home pay. A common approach is to calculate a break-even rate, then add a margin that covers taxes and leaves real profit.
- What is the difference between hourly and project pricing?
- Hourly pricing charges for time spent, so income depends on hours logged. Project or value-based pricing charges a fixed fee for an outcome, regardless of hours. Project pricing rewards efficiency and can raise earnings, but it needs a clear scope. Many consultants start hourly and move to project fees as they gain confidence.
- What overhead should I factor into my rate?
- Include every cost of running the business: software, hardware, insurance, healthcare, office or home-office rent, memberships, training, accounting and legal fees, marketing, and supplies. Total these for the year and add them to your income goal before dividing by billable hours, so your rate actually covers your costs.
- Why do consultants undercharge?
- Many set rates by copying a peer or converting a salary straight to an hourly number, without accounting for non-billable time, overhead, and taxes. That leaves the rate too low to sustain the business. Calculating from a target income, real billable hours, and full costs usually produces a higher, more accurate rate.
- How much to charge for consulting per hour?
- Work it out from your own numbers rather than a market figure. Add your target annual income and yearly expenses, then divide by the hours you can realistically bill in a year, and add a margin for taxes and profit. A consultant wanting $120,000 over 1,000 billable hours needs about $120 an hour before that margin.
Set the rate on measured hours, not a guess
BillNotch tracks your working day, sorts it into projects, and shows the billable share you actually hit, so the next rate you quote is built on real utilization instead of an optimistic one.
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