Instant rate checks need clean inputs. Everhour connects tracked billable time to invoicing after you set the rate.
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This calculation answers the practical pricing question behind a quick quote: what hourly bill rate covers your desired income, business overhead, self-funded benefits, and tax reserve. For U.S. self-employed pricing, the calculation runs in USD and uses a cost-plus gross-up before dividing by billable hours. The result is a bill rate, not net take-home and not an employee wage equivalent.
An instant answer works best when you already have four annual inputs: target income, ordinary and necessary business expenses, benefits substitute, and tax reserve. The final input is realistic annual billable hours. A full-time employee calendar uses about 2,080 paid hours, but a solo freelancer often bills far fewer hours after proposals, admin, professional development, sick time, and unpaid gaps.
Use this formula: `(target income + overhead + benefits substitute + tax reserve) / billable hours`. For example, set target income at $92,000, overhead at $17,000, benefits substitute at $13,000, and tax reserve at $25,000. The annual cost base is $147,000. If 1,470 hours are realistically billable during the year, the required hourly rate is $100.00.
That rate is the minimum billable hourly price that supports the inputs you chose. The tax reserve should reflect self-employment and income-tax planning, since a U.S. sole proprietor or independent contractor generally reports business profit or loss on Schedule C and uses Schedule SE for Social Security and Medicare taxes on self-employment income. Self-employed individuals generally pay estimated taxes quarterly because contractor pay has no employer withholding.
The fastest calculation fails when the inputs skip costs that do not show up on a client invoice. A $100 hourly bill rate does not mean you keep $100 for every hour spent on the business. Non-billable time lowers effective earnings, and business costs reduce take-home before personal spending begins. Use annual totals that match how you actually work, not a perfect 40-hour billable week.
Public rate benchmarks help as a sanity check after the cost-plus floor is clear. A 2023 Fiverr survey found that project-based pricing was the most common arrangement among U.S. freelancers, followed by hourly and value-based pricing; among U.S. independent professionals who charged hourly, the average hourly rate was $93. Upwork's 2026 public profile-rate bands are directional marketplace ranges, not payroll wage medians.
A one-off instant calculation is enough for a first-pass quote, a quick retainer check, or a simple comparison between hourly and project pricing. It gives you a number to test against the work scope before you commit. Recalculate when the input changes, especially billable hours, overhead, benefits substitute, or tax reserve. Small changes in utilization move the hourly result fast.
A managed workflow matters once the rate becomes part of live client work. Track billable and non-billable time, keep rate cards current, separate expenses, and hand approved billable time into invoicing without rebuilding the invoice from notes. Everhour Billing & Invoicing converts tracked billable time and expenses into invoices, calculates amounts from rates, excludes non-billable tasks, and exports invoices to QuickBooks Online, Xero, or FreshBooks.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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An instant calculation uses annual inputs you already know, then applies the cost-plus formula in one pass. You need target income, overhead, benefits substitute, tax reserve, and realistic annual billable hours. The result is fast because it avoids building a full tax model or project estimate before giving you a usable bill-rate floor.
Billable hours usually move the rate the fastest because they sit in the denominator. A $147,000 annual cost base divided by 1,470 billable hours equals $100.00 per hour. The same cost base divided by 1,225 billable hours equals $120.00 per hour. Lower utilization requires a higher rate.
No. The instant result is a bill rate that clients pay for billable work. Take-home pay comes after business expenses, self-employment tax, income tax, benefit costs, and any unpaid time. Effective rate is different again, because it divides net earnings by all hours worked, including admin, sales, and other non-billable time.
Yes, a U.S. self-employed rate should include a tax reserve. For 2026 estimated tax, net self-employment profit is multiplied by 92.35%; that amount is subject to 12.4% Social Security up to the $184,500 wage base plus 2.9% Medicare. Additional Medicare Tax can apply above the filing-status thresholds.
Yes. Use the hourly rate as the internal floor, then multiply it by estimated billable hours for the project. Add fixed costs, risk, rush work, or scope uncertainty separately. The client can see a project fee while you still know whether the price supports your income target and business costs.
Everhour Billing & Invoicing uses tracked billable time, project or member rates, and billable expenses to calculate invoice amounts while excluding non-billable tasks. Invoices can be grouped into client-facing line items and exported to QuickBooks Online, Xero, or FreshBooks, with invoice status synced back to Everhour.
Set the rate once, then track billable time and expenses against real work. Everhour turns approved billable entries into invoices and keeps non-billable work out of client totals.
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