Contractor Hourly Rate Calculator
Calculates how much to charge per hour as a contractor factoring in wages, overhead, and profit
Base hourly wage you want to earn
Percentage to cover overhead costs (tools, insurance, vehicle, etc.)
Desired profit margin on top of wage and overhead
The rate to charge clients per hour
Portion of your rate that covers overhead costs
Profit earned on each billable hour
Frequently Asked Questions
How is a contractor rate different from an employee salary?
Contractors must cover their own taxes (self-employment tax is ~15.3% in the US), health insurance, retirement contributions, equipment, and overhead. A contractor charging $75/hour may net the equivalent of a $45/hour employee after these expenses.
What should I include in overhead?
Common overhead items include health insurance, retirement contributions, software subscriptions, equipment depreciation, office space, professional development, accounting fees, and business insurance. These typically add 20-40% on top of your base wage.
How much profit should I add to my rate?
Most contractors add 10-20% profit margin on top of their costs. This profit allows you to save for slow periods, invest in your business, and account for unpaid time between contracts.
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