1. What is the Hourly Rate Formula?

The Hourly Rate formula calculates how much to charge per hour for consulting services based on your costs, overhead, desired profit, and available billable hours.

2. How Does the Calculator Work?

The calculator uses the hourly rate formula:

Where:

• Salary — Your annual salary or desired compensation
• Overhead — Business operating costs (office, equipment, etc.)
• Profit — Desired profit margin
• Billable Hours — Number of hours you can realistically bill per year

Explanation: The equation accounts for all your costs and desired earnings, divided by the actual time you can bill to clients.

3. Importance of Accurate Rate Calculation

Details: Calculating your true hourly rate ensures you cover all expenses, pay yourself appropriately, and achieve your profit goals while remaining competitive.

4. Using the Calculator

Tips: Enter all values in your local currency. Billable hours should reflect realistic working hours minus non-billable time (marketing, admin, etc.).

5. Frequently Asked Questions (FAQ)

Q1: How do I estimate my billable hours?
A: A common rule is 60-70% of total working hours (e.g., 1000-1200 hours/year for full-time consulting).

Q2: What should be included in overhead?
A: Include office rent, utilities, software subscriptions, insurance, equipment, and other business expenses.

Q3: How much profit should I add?
A: Typical profit margins range from 10-30% depending on your industry and business goals.

Q4: Should I use gross or net salary?
A: Use your desired gross salary before taxes, as taxes are part of your business expenses.

Q5: How often should I recalculate my rate?
A: Recalculate annually or whenever your costs, salary needs, or available hours change significantly.