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Contractor Hourly Rate Calculator + Accompanying Instructions
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How to calculate a contractor hourly rate
If you’re a freelancer, consultant, or independent contractor, figuring out what to charge can feel like a guessing game. Charge too little, and you’re working for peanuts. Charge too much, and clients may ghost you. So how do you calculate a fair contractor hourly rate—one that actually covers your expenses, taxes, and time off while staying competitive?
That’s exactly what our contractor rate calculator does. It’s a simple but powerful spreadsheet that helps you:
- Convert an employee salary into an equivalent contractor rate
- Factor in self-employment taxes, overhead, and unpaid time off
- See how much you really need to charge to stay profitable
- Avoid underpricing yourself and leaving money on the table
Why you need a contractor rate calculator
Many freelancers and consultants make one big mistake—they base their rate on what they want to earn, rather than what they need to earn. Unlike employees, contractors don’t get benefits, paid vacation, or an employer covering half of their taxes.
Our contractor rate calculation form helps you break it all down so you can set rates that:
- Cover all your costs – No more undercharging because you forgot about self-employment tax.
- Stay competitive – Charge what you’re actually worth without scaring off clients.
- Plan for time off – You don’t get paid vacation, so your rate needs to account for it.
- Make informed pricing decisions – Stop guessing and start charging with confidence.
What’s inside the contractor rate calculator?
This easy-to-use contractor rate calculation spreadsheet walks you through:
- Entering a comparable employee salary for your industry
- Factoring in additional costs like healthcare, software, and admin time
- Accounting for self-employment tax and retirement savings
- Adjusting for billable vs. non-billable hours
- Seeing the exact hourly, daily, or project rate you need to charge
Who should use this?
- Freelancers who want to price their services correctly
- Consultants switching from a salaried job to self-employment
- Independent contractors trying to stay competitive
- Business owners hiring contractors who want to understand fair market rates
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