Real Hourly Rate (After Overhead)

This real hourly rate calculator shows what you actually earn per hour once you include overhead, unpaid time, and time off during the year. It is designed for freelancers, contractors, consultants and solo business owners who bill by the hour or use an internal hourly number to price projects and retainers.

1. Start with the hourly rate you charge clients

In the first box, enter the hourly rate you currently charge in USD. This is your public, billable rate that appears in proposals, contracts or invoices. The calculator treats this as the amount clients see and uses it to estimate your total client revenue for the year based on your billable hours.

2. Add your realistic billable hours per week

Next, fill in billable hours per week. Very few freelancers can bill 40 hours every week. Admin, emails, marketing, proposals, travel and context switching all eat into your schedule. If you typically bill 20–30 hours, put that number in. The tool assumes a standard 40-hour working week when you are working and treats the gap between 40 and your billable hours as unpaid work time.

3. Estimate your overhead percentage and time off

In the overhead box, enter your best estimate of business costs as a percentage of revenue. Include software subscriptions, equipment, office space, insurance, professional services, and other recurring expenses. Many solo businesses land somewhere between 20% and 40% depending on their setup, but you can adjust this to match your real numbers.

Then choose how many weeks off per year you take. Count vacation, public holidays, sick time and gaps between projects where you are not working. More time off means fewer working weeks, so each billable hour needs to carry a larger share of your annual income target.

4. Read the breakdown and compare nominal vs real hourly pay

After you click Calculate, the summary box highlights your real hourly rate after overhead and unpaid time. Under that headline number, you’ll see:

• your nominal hourly rate and the estimated annual client revenue it generates,
• how many weeks you actually work and an estimate of unpaid hours per week,
• your annual income after overhead costs, and
• your effective hourly rate on both total hours and billable hours only.

The Copy summary button gives you a clean, text-only breakdown to paste into a spreadsheet, pricing worksheet, or an internal notes document when you’re reviewing your rates.

5. Use the numbers to decide what you should really charge

If your real hourly rate is much lower than what you want to earn, you can either raise your billable rate, work on increasing billable hours, reduce overhead, or some combination of the three. Try a few “what-if” scenarios: nudge your rate up by $5–$10, lower overhead by cancelling tools you don’t use, or plan for more focused billable time and see how that shifts your effective hourly pay.

This calculator is a planning aid only. Always double-check your numbers in your accounting software or spreadsheet and talk to an accountant or advisor when making bigger financial decisions about your business.

Math explainer: how your real hourly rate is calculated

This calculator assumes a standard 40-hour working week when you are working during the year. Let R be your billable hourly rate in USD, H_b your billable hours per week, W_off the number of weeks off per year, and o your overhead percentage as a decimal (for example 0.30 for 30%).

Weeks worked per year are:

W_work = 52 − W_off

If you bill fewer than 40 hours per working week, the tool assumes total working hours per week are 40 and the rest are unpaid admin, marketing and similar work. So unpaid hours per week are:

H_unpaid = max(40 − H_b, 0)

Annual billable hours are H_b × W_work and total hours worked (billable + unpaid) are (H_b + H_unpaid) × W_work. Annual client revenue is:

Revenue = R × H_b × W_work

Overhead costs are Revenue × o, so income after overhead is:

Income after overhead = Revenue × (1 − o)

Finally, your real hourly rate is that income divided by all hours you work:

Real hourly rate = Income after overhead ÷ total hours worked

The calculator also shows an effective hourly rate on billable hours only by dividing income after overhead by your annual billable hours. This lets you compare different pricing options and see how much each billable hour is really worth.

References and further reading

• Working time – overview of standard working hours – Background on typical weekly working hours and how they vary between countries.
• How do I set freelance rates? – Practical guide to turning annual income targets, overhead and non-billable time into an hourly rate.
• How to set your freelance rate – Walkthrough of calculating a sustainable rate based on desired income, expenses and market positioning.