Pricing & Profit calculator
Hourly Rate Calculator
Work out a practical hourly rate from your target income, annual overheads, billable hours, and working weeks.
Why use it
- Useful when you need to convert an annual income target into a practical hourly charge.
- The result only works if billable hours are realistic. Non-billable admin time should stay out of the billable hours input.
- A higher hourly rate is often a sign that your billable capacity is tighter than you think, not that the formula is wrong.
Calculator tool
Use the hourly rate calculator
Work out a practical hourly rate from your target income, annual overheads, billable hours, and working weeks.
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Email it to yourself, send it to a customer, or copy the figures into a quote — all without an account.
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Important note
BizTools.au is designed to make business numbers easier to check, but calculator outputs still need judgment and real-world context.
- Calculator results are general estimates only and depend on the figures entered.
- Examples and summaries are provided for general information, not legal, tax, accounting, payroll, or financial advice.
- Before relying on a result for a real decision, check your assumptions and get qualified advice where needed.
How it works
Understand the formula before you use the result
The calculator uses a simple working formula so you can sense-check the result quickly and explain it clearly inside your business.
Hourly rate formula
Total annual revenue required = desired income + annual overheads
Total annual billable hours = billable hours per week × working weeks per year
Hourly rate = total annual revenue required / total annual billable hours
This gives a baseline hourly charge needed to cover your target income and business running costs.
Worked example
See the numbers in a realistic scenario
Use the example below as a sense check when you compare the calculator result to a real quote, sale, or pricing decision.
Worked example
Worked example: setting a sustainable service rate
A consultant wants $120,000 of annual income, expects $30,000 of overheads, can bill 24 hours a week, and plans to work 46 weeks a year.
- Desired annual income: $120,000
- Annual business overheads: $30,000
- Billable hours per week: 24
- Working weeks per year: 46
Calculation steps
- Total annual revenue required = $120,000 + $30,000 = $150,000
- Total annual billable hours = 24 × 46 = 1,104 hours
- Hourly rate = $150,000 / 1,104 = $135.87 per hour
To cover the income target and overheads, the business needs to average about $135.87 per billable hour.
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FAQ
Common questions about the hourly rate calculator
These are the practical questions operators usually run into when they apply the result to a real business decision.
What counts as billable hours?
Billable hours are the hours you can actually invoice or recover from jobs. Admin, quoting, sales, travel, and rework usually reduce the real number.
Why is my hourly rate higher than expected?
That usually means your billable hours are lower than your working hours, your overheads are higher than assumed, or your income target is tighter than your current pricing allows.
Should I use this as my final price?
Use it as a baseline. You may still need to build in margin for risk, complexity, urgent work, subcontractors, or scope changes.
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