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Contractor Hourly Rate Calculator
Enter the take-home pay you want, a tax estimate, your yearly overhead and a profit cushion, then your weeks, hours and the share of them that you can bill. The calculator gives the hourly rate you must charge. $60,000 take-home with $20,000 overhead and 60% billable time needs $96.45 an hour.
Updated · Sources re-checked by
96.45 per billable hour
| Pay before tax | 80,000 |
| Pay plus overhead | 100,000 |
| Revenue to bill in a year | 111,111.11 |
| Billable hours in a year | 1,152 |
| Revenue per week worked | 2,314.81 |
| Revenue per month | 9,259.26 |
The tax percent is your own estimate, not advice. Works in any currency. Nothing you type is saved or sent anywhere.
How the hourly rate is worked out
Pre-tax pay = take-home pay ÷ (1 − tax rate). Costs = pre-tax pay + yearly overhead (insurance, truck, tools, phone, software, licenses). Revenue needed = costs ÷ (1 − profit percent), a cushion for slow months and growth. Billable hours = weeks worked × hours per week × the share of time you can actually bill (driving, quotes, paperwork and shopping for materials are not billable). Hourly rate = revenue needed ÷ billable hours. The tax rate is your own estimate, so it is not tax advice.
| Billable share | Billable hours | Hourly rate |
|---|---|---|
| 40% | 768 | $144.68 |
| 50% | 960 | $115.74 |
| 60% | 1,152 | $96.45 |
| 70% | 1,344 | $82.67 |
| 80% | 1,536 | $72.34 |
| Cost | Why it counts |
|---|---|
| Liability and vehicle insurance | You pay it whether or not the phone rings |
| Truck, fuel and repairs | Driving to jobs and the supply house is unpaid time |
| Tools and replacements | Hand tools break and wear out |
| Licenses, permits and software | Fixed yearly costs |
| Phone, advertising and a website | How the next job finds you |
| Unpaid weeks | Holidays, sickness and slow seasons |
Worked example: $60,000 take-home, 25% tax estimate, $20,000 overhead
- Pre-tax pay: 60,000 ÷ (1 − 0.25) = $80,000.00.
- Costs: 80,000 + 20,000 overhead = $100,000.00.
- Revenue needed with a 10% cushion: 100,000 ÷ 0.90 = $111,111.11.
- Billable hours: 48 weeks × 40 hours × 60% = 1,152.
- Hourly rate: 111,111 ÷ 1,152 = $96.45 an hour, about $2,314.81 of work to bill each week.
Common questions
How do I work out my hourly rate as a contractor?
Start from the pay you want after tax, add the tax and your overhead, add a profit cushion, and divide by the hours you can really bill. This page does those steps in order.
Why can't I divide my pay by 2,080 hours?
Because you cannot bill every hour of a 40-hour week. Quotes, driving, supply runs and paperwork are unpaid, so billable time is often only half to two-thirds of the week.
What billable percentage should I use?
Use your own history if you track time. Many solo tradespeople bill roughly half to two-thirds of their working hours. Try 50, 60 and 70 in the table and see how much the rate moves.
What should I count as overhead?
Every cost of being in business that is not charged to a single job: insurance, vehicle, tools, licenses, phone, software and advertising. The list above has more.
What tax rate should I enter?
Your own estimate of the share of your income that goes to income and self-employment tax. It depends on where you live and your situation, so ask an accountant if you are unsure.
Is this rate the same as what employees earn per hour?
No. An employee's wage does not carry your overhead, tax or unpaid time. A contractor rate is usually well above a wage for the same trade, which is why this page is built backward from your own costs.
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Sources
- U.S. Bureau of Labor Statistics, Occupational Outlook Handbook: pay for construction trades (to compare your rate with local wages) (checked October 28, 2026)
- Overhead (business): ongoing costs of running a business that are not charged to one job (checked October 28, 2026)
This calculator is an estimate for planning. It is not tax, accounting or legal advice. Compare the result with local market rates before you quote.