function calculateContractorRate() {
// 1. Get input values
var desiredSalary = parseFloat(document.getElementById('desiredSalary').value) || 0;
var annualOverhead = parseFloat(document.getElementById('annualOverhead').value) || 0;
var daysPerWeek = parseFloat(document.getElementById('daysPerWeek').value) || 0;
var holidayWeeks = parseFloat(document.getElementById('holidayWeeks').value) || 0;
var sickDays = parseFloat(document.getElementById('sickDays').value) || 0;
var dailyHours = parseFloat(document.getElementById('dailyHours').value) || 0;
// 2. Validate critical inputs to prevent errors
if (daysPerWeek <= 0 || dailyHours <= 0) {
alert("Please enter valid working hours and days.");
return;
}
// 3. Logic Implementation
// Total weeks in a year
var totalWeeks = 52;
// Calculate Total Potential Working Days
var totalPotentialDays = totalWeeks * daysPerWeek;
// Calculate Days lost to holidays
var holidayDaysLost = holidayWeeks * daysPerWeek;
// Calculate Total Non-Billable Days (Holidays + Sick/Admin)
var totalNonBillableDays = holidayDaysLost + sickDays;
// Calculate Actual Billable Days
var billableDays = totalPotentialDays – totalNonBillableDays;
if (billableDays <= 0) {
document.getElementById('resultsArea').style.display = 'block';
document.getElementById('resultDailyRate').innerHTML = "Invalid Schedule";
document.getElementById('resultHourlyRate').innerHTML = "-";
document.getElementById('resultBillableDays').innerHTML = "0";
document.getElementById('resultTotalRevenue').innerHTML = "-";
return;
}
// Calculate Financial Targets
var totalRevenueNeeded = desiredSalary + annualOverhead;
// Calculate Rates
var dailyRate = totalRevenueNeeded / billableDays;
var hourlyRate = dailyRate / dailyHours;
// 4. Update the DOM
document.getElementById('resultsArea').style.display = 'block';
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resultDailyRate').innerHTML = formatter.format(dailyRate);
document.getElementById('resultHourlyRate').innerHTML = formatter.format(hourlyRate);
document.getElementById('resultBillableDays').innerHTML = Math.round(billableDays) + " Days";
document.getElementById('resultTotalRevenue').innerHTML = formatter.format(totalRevenueNeeded);
}
Understanding Your Value: How to Calculate Your Contractor Daily Rate
Transitioning from permanent employment to contracting or freelancing offers freedom, flexibility, and potentially higher earnings. However, setting your pricing correctly is the most critical step in ensuring financial stability. Unlike a permanent salary, a contractor's daily rate must absorb the costs of time off, healthcare, equipment, and the inherent risk of self-employment.
This Daily Rate Contractor Calculator is designed to reverse-engineer your required rate based on your target annual income and lifestyle requirements, ensuring you don't undercharge for your services.
The Difference Between Salary and Day Rate
A common mistake new contractors make is simply dividing their previous annual salary by 260 (the standard working days in a year). This calculation is fundamentally flawed because it assumes you will work every single weekday of the year without holidays, sick leave, or administrative downtime.
As a contractor, you are not paid for:
Vacation Time: If you take 4 weeks off, that is 20 days of zero income.
Sick Leave: There is no paid sick leave; if you don't work, you don't bill.
Bench Time: Time spent between contracts or looking for new clients.
Admin Time: Doing your taxes, invoicing, and marketing is unbillable work.
How the Calculation Works
To determine a sustainable daily rate, we use the following logic:
Total Target Revenue: We sum your desired "take-home" equivalent salary with your business overheads (software subscriptions, insurance, accountant fees, hardware).
Billable Days Capacity: We calculate the actual number of days you can invoice.
Formula: (52 Weeks × Days per Week) – (Holiday Weeks × Days per Week) – Sick Days.
The Rate: Dividing the Total Target Revenue by the Billable Days Capacity gives you the minimum daily rate required to meet your financial goals.
Example Calculation
Let's say you want to earn a gross equivalent of $100,000 per year and you have $5,000 in business expenses.
You plan to work 5 days a week but want 4 weeks of vacation and anticipate 5 sick/admin days.
Total Potential Days: 52 weeks × 5 days = 260 days.
Holiday Loss: 4 weeks × 5 days = 20 days.
Sick/Admin Loss: 5 days.
Total Billable Days: 260 – 20 – 5 = 235 days.
Required Revenue: $105,000.
Daily Rate: $105,000 / 235 ≈ $446.80 per day.
If you had simply divided $100,000 by 260, you would have charged $384/day, leaving you with a significant shortfall by the end of the year.
Factors Influencing Your Rate
While this calculator gives you a mathematical baseline, market factors also apply. If your calculated rate is significantly higher than the market average for your role, you may need to reduce expenses or increase billable hours. Conversely, if your calculated rate is lower than the market rate, you should charge the market rate and enjoy the additional profit margin.
Always consider adding a "buffer" percentage (typically 10-20%) to your calculated rate to account for unexpected periods of unemployment between contracts.