Quick answer: rate = (target income x (1 + set-aside %) + yearly costs) / billable hours per year. For 90,000 with 25% set aside and 12,000 of costs over 1,150 billable hours, charge about 108.26 an hour.
Why contractor rates look high
An employee is paid for about 2,080 hours a year, including holidays and vacation. A contractor may bill 1,000 to 1,400 hours after sales, admin and time off, and pays their own costs and benefits. That is why the same yearly income needs a much higher hourly rate.
Track how many of your hours are actually billable with the billable hours calculator.
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Questions
How many billable hours does a freelancer have a year?
Fewer than it seems: after sales, admin, holidays and sick days, 1,000 to 1,400 is a common planning range. Use your own tracked hours when you have them.
How do I compare a contract rate with a salary?
A salaried employee is paid for 2,080 hours including paid time off, and the employer covers benefits and its share of payroll taxes. Divide a contract offer by your real billable hours and subtract your own costs before comparing.