Find the contractor bill rate needed to reach a target income after overhead.
Overview
Independent contractors must price for gaps between contracts, insurance, and unpaid admin—not just a W-2 equivalent wage.
Enter target income, billable hours, and overhead percent. Revenue needed is target inflated by overhead; divide by hours for the rate.
Compared with freelancers, contractors often bill more hours but still need overhead for equipment, bonding, and downtime.
Steps
Desired annual contractor pay.
Hours you expect to invoice yearly.
Tools, insurance, travel, and idle time buffer.
Review hourly rate and annual revenue needed.
Use the rate as a floor for SOWs and change orders.
Math
hourlyRate = targetIncome × (1 + overhead%/100) / billableHours
Same structure as freelance pricing: inflate income for overhead, divide by billable hours.
Worked cases
95,000×1.3/1,800 ≈ $68.61
About $69/hr.
123,500/1,400 ≈ $88.21
About $88/hr.
109,250/1,800 ≈ $60.69
About $61/hr.
Why use this
Questions