Determine your billable hourly rate based on target income and overhead.
Your Calculated Standard Rate
How to Calculate Your Standard Hourly Rate
Calculating a standard rate is a critical step for freelancers, consultants, and service-based businesses to ensure profitability and sustainability. Unlike a traditional salary, a standard hourly rate must cover not only your take-home pay but also your business overhead, taxes, and non-billable time (such as marketing, admin, and professional development).
The Standard Rate Formula
The math behind a sustainable rate involves dividing your total required revenue by your actual billable hours. The formula is as follows:
Standard Rate = [(Desired Salary + Business Expenses) × (1 + Profit Margin %)] / (Billable Weeks × Billable Hours Per Week)
Key Components Explained
Desired Annual Salary: The amount of pre-tax income you want to earn personally.
Annual Business Expenses: This includes software subscriptions, equipment, insurance, office space, and marketing costs.
Billable Weeks: A typical year has 52 weeks. After accounting for 2 weeks of vacation, 1 week of sick leave, and 1 week of holidays, most professionals use 48 billable weeks.
Billable Hours: You cannot bill for 40 hours a week. Administrative tasks usually take 20-40% of your time. Most freelancers aim for 20 to 30 billable hours per week.
Profit Margin: A "buffer" added to reinvest in your business or handle unforeseen fluctuations in work.
Practical Example
If you want to earn $80,000 a year, have $10,000 in annual expenses, and want a 10% profit margin, your target revenue is $99,000. If you work 48 weeks at 25 billable hours per week (1,200 total hours), your standard rate would be $82.50 per hour.
function calculateStandardRate() {
var salary = parseFloat(document.getElementById('targetSalary').value);
var expenses = parseFloat(document.getElementById('annualExpenses').value);
var weeks = parseFloat(document.getElementById('billableWeeks').value);
var hours = parseFloat(document.getElementById('billableHoursPerWeek').value);
var margin = parseFloat(document.getElementById('profitMargin').value);
// Validation
if (isNaN(salary) || isNaN(expenses) || isNaN(weeks) || isNaN(hours) || isNaN(margin)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (weeks <= 0 || hours <= 0) {
alert("Weeks and hours must be greater than zero.");
return;
}
// Calculation logic
var totalCosts = salary + expenses;
var marginMultiplier = 1 + (margin / 100);
var targetRevenue = totalCosts * marginMultiplier;
var totalBillableHours = weeks * hours;
var standardRate = targetRevenue / totalBillableHours;
// Display results
document.getElementById('rateResult').style.display = 'block';
document.getElementById('hourlyRateDisplay').innerText = '$' + standardRate.toFixed(2) + ' per hour';
var breakdownText = "To earn a net salary of $" + salary.toLocaleString() +
" with expenses of $" + expenses.toLocaleString() +
", you need to generate $" + targetRevenue.toLocaleString() +
" in annual revenue across " + totalBillableHours + " billable hours.";
document.getElementById('breakdownDisplay').innerText = breakdownText;
// Smooth scroll to result
document.getElementById('rateResult').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}