Consulting Rate Calculator
Calculate your consulting rate based on your desired annual income, billable hours, and business expenses.
Your Information
How much do you want to take home per year?
Most consultants bill 1,500-1,800 hours per year (75% utilization)
Business expenses (software, insurance, equipment, etc.)
Federal + state income tax + self-employment tax
Additional profit for business growth and savings
Your Rates
Recommended Hourly Rate
$120.00
Rounded to nearest $5
Exact Hourly Rate
$119.23
Based on your inputs
Daily Rate
$953.85
8 hours per day
Weekly Rate
$4,769.23
40 hours per week
Monthly Rate
$20,626.92
~173 hours per month
Annual Revenue Needed
$186,000.00
Total revenue to achieve your goals
Break-Even Rate
$99.36
Minimum rate to cover costs (no profit)
How to Use the Consulting Rate Calculator
Step 1: Enter Your Desired Annual Salary
Start by entering how much you want to earn per year as a consultant. This should be your take-home salary goal, similar to what you'd earn as a W2 employee. For example, if you want to earn $100,000 per year, enter that amount.
Example: Enter $100,000 if you want to earn six figures annually.
Step 2: Set Your Billable Hours
Not all hours in a year are billable. You'll spend time on marketing, administration, professional development, and vacations. Most consultants achieve 60-80% utilization, meaning 1,200-1,600 billable hours per year.
Pro Tip
New consultants should aim for 1,200-1,400 hours. Established consultants can target 1,500-1,800 hours.
Step 3: Account for Business Expenses
As a consultant, you'll have overhead costs that employees don't pay: health insurance, software subscriptions, professional liability insurance, equipment, home office expenses, and more. Typically, this ranges from 15-40% of your revenue.
Step 4: Review Your Results
The calculator shows your recommended rate (rounded to the nearest $5 for easy quoting), plus daily, weekly, and monthly rates for different project structures.
Common Mistakes to Avoid
- ❌ Forgetting about taxes: Self-employment tax adds 15.3% on top of income tax
- ❌ Overestimating billable hours: Assuming 2,080 hours (100% utilization) is unrealistic
- ❌ Not including profit margin: You need savings for slow periods and business growth
- ✅ Correct approach: Be conservative with billable hours and realistic about expenses
Why Use a Consulting Rate Calculator?
Benefits:
- Accurate Pricing: Ensure you're charging enough to meet your financial goals
- Save Time: No more manual calculations or spreadsheet errors
- Professional Confidence: Back up your rates with data when negotiating with clients
- Free & Private: No signup required, your data stays on your device
Who Should Use This Calculator:
- New freelancers transitioning from W2 employment
- Experienced consultants raising their rates
- Agencies pricing client projects
- Anyone evaluating contractor vs employee opportunities
Understanding Consulting Rates
The 2-3x Rule
A common rule of thumb is that consultants should charge 2-3 times their previous hourly W2 rate. If you earned $50/hour as an employee ($100,000 salary), you should charge $100-150/hour as a consultant. This accounts for:
- Self-employment taxes (15.3% additional)
- Health insurance ($12,000-20,000/year)
- Retirement contributions (no employer match)
- Paid time off (no paid vacation or sick days)
- Business expenses (software, equipment, insurance)
- Non-billable time (marketing, admin, training)
Industry Benchmarks
| Industry | Beginner Rate | Intermediate Rate | Expert Rate |
|---|---|---|---|
| Software Development | $75-100/hr | $125-175/hr | $175-400/hr |
| Management Consulting | $100-150/hr | $150-250/hr | $250-500/hr |
| Marketing Consulting | $75-125/hr | $125-200/hr | $200-350/hr |
| Design | $60-100/hr | $100-150/hr | $150-300/hr |
Frequently Asked Questions
How do I know if my rate is too high or too low?
Research market rates for your industry and experience level. If you're consistently winning every project you bid on, your rates might be too low. If you're losing most opportunities, they might be too high. A 30-50% win rate is healthy.
Should I charge hourly, daily, or project-based rates?
Hourly is best for undefined scopes and ongoing relationships. Daily rates work well for workshops or focused engagements. Project-based (value-based) pricing can earn more but requires accurate scoping. Many consultants use a mix depending on the client and project.
How often should I raise my rates?
Review your rates annually, or after completing 10-15 successful projects. Factor in inflation (3-5%), increased experience, new certifications, and market demand. Most consultants raise rates 5-15% per year.
What if clients say I'm too expensive?
Focus on value, not price. Demonstrate ROI, share case studies, and consider offering payment plans or retainers. Some clients aren't your ideal customer - it's okay to lose price-focused prospects to find value-focused clients.
Should I offer discounts?
Avoid percentage discounts that devalue your work. Instead, offer volume discounts (retainers), faster payment terms (2% discount for payment within 7 days), or package deals that provide more value. Never discount for vague reasons like "to win the project."