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What should you charge per hour?

Your billable rate has to cover far more than the hour a client sees. Model the whole year and find both your floor and your profit-aware target.

Quick answer

A business rate must cover the full year across the hours attributable to client projects.

Start with owner income, overhead, and reserves. Spread that annual cost across realistic project-allocatable hours, then account for the desired profit margin. Count both delivery and project-specific administration in that denominator when both will be priced in a quote. The result is an internal benchmark—not a wage or a guarantee that every market will accept the rate.

Project hours = working weeks × weekly hours × project-allocatable percentage

Target rate = [(owner income + overhead + reserve) ÷ (1 − profit margin)] ÷ project hours

Reviewed September 16, 2026

Step 1

Describe your business year

Example already loadedA $75,000 owner-income target, $18,000 of annual overhead, and a realistic share of project time. Replace each field with your business numbers.

Income and costs

Target owner income

What you want the business to pay you before personal income tax.

Annual business overhead

Software, insurance, rent, equipment, marketing, and other annual costs.

Employer taxes + benefits reserve

Employer-side payroll taxes and business-funded benefits or retirement contributions beyond the pre-tax owner-income target. Do not add personal income tax here.

Desired profit margin

Profit retained by the business as a percentage of target revenue.

Time and capacity

Working weeks

/ year

Use fewer than 52 to allow for vacation, holidays, and downtime.

Hours per week

hours

All working time, including admin and sales—not just client work.

Project-allocatable time

The share of working time attributable to client projects, including delivery and project-specific scoping, communication, administration, and handoff.

This is a planning estimate, not tax, legal, or financial advice. Check your assumptions with a qualified professional.

Your result

Recommended hourly rate

Live

$107.78per project hour

Minimum sustainable rateCovers your inputs, but adds no business profit.

$97.01

Target annual revenue$124,167

Target per month$10,347

Project hours / year1,152

Shared non-project hours768

Where each revenue dollar goes

Target mix

Owner pay 60%Overhead 14%Reserve 15%Profit 10%

At 1,152 project-allocatable hours, this rate targets $12,417 in annual business profit after the owner-income, overhead, and reserve inputs are covered.

Decision check

Use this rate as an internal floor. A client quote still needs delivery time, project administration, direct costs, and scope protection.

Next decisionTurn this rate into a project quote

Add delivery time, project administration, direct costs, scope risk, and a deposit to build a fixed price.

Build a project quote →

Keep this decisionYour inputs stay on this device.

Understand this decisionHourly or fixed price? Choose based on risk.Use scope certainty, client control, repeatability, and change-order discipline to choose the safer pricing model.Read the guide →

Why the usual math fails

Salary divided by 2,080 hours is not a business rate.

A 40-hour week does not produce 40 project hours. Shared selling, company bookkeeping, training, idle time, vacation, and slow periods reduce capacity. Project-specific estimating, communication, scheduling, and handoff belong to the project.

OwnerClarify first estimates annual project-allocatable hours: delivery plus administration required by specific client work. It then spreads owner income, overhead, reserves, and a chosen profit margin across those hours once.

Review the exact formulas →

Questions worth asking

Before you use the number

What counts as business overhead?

Include costs the business must pay regardless of a specific job: software, insurance, rent, licenses, equipment, bookkeeping, marketing, phone, education, and similar operating expenses. Direct project costs belong in the project quote instead.

What should I use for project-allocatable time?

Count delivery and the scoping, meetings, communication, scheduling, handoff, invoicing, and collection work caused by specific projects. Exclude shared marketing, general company administration, training, and idle time. Not every project hour must appear as a separate line item on the client invoice.

Is the reserve a personal income-tax estimate?

No. The owner-income field is already a pre-tax target. Use the reserve for employer-side payroll taxes and business-funded benefits or retirement contributions beyond that target. Do not add personal income tax twice. Actual obligations vary by entity, location, and circumstances, so use qualified advice.

Should every client pay this exact rate?

Treat it as an internal pricing benchmark. Fixed-price work may command more because of speed, expertise, urgency, risk, or value. A difficult project can also require a contingency. What matters is that the effective rate does not quietly fall below your floor.