Consulting Fees Calculator
Calculate the hourly and daily consulting rates needed to hit a target annual income, accounting for billable utilization and business overhead.
How to use this tool
- Enter target annual net income, business overhead (taxes, insurance, etc.), weeks worked per year, billable utilization rate and working hours per day in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your required hourly rate and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Revenue Needed = Target Income × (1 + Overhead Rate)
Billable Hours = Weeks × 5 days × Hours/day × Utilization Rate
Hourly Rate = Revenue Needed / Billable Hours
How it works
The consulting rate is derived by grossing up the desired net income by the overhead factor (to cover self-employment taxes, insurance, software, and non-billable time), then dividing by the number of hours actually billed to clients each year. Overhead is modeled as a flat percentage markup on target income.
The billable hours are estimated from weeks worked per year, a standard 5-day work week, and a utilization rate representing the share of working time spent on billable client work versus marketing, admin, and professional development. Adjust the utilization rate to match your actual practice.
Worked example
Targeting $150,000 net income
- Target income = $150,000. With 30% overhead, revenue needed = 150,000 × 1.30 = $195,000.
- Working 47 weeks × 5 days × 8 hours = 1,880 total working hours per year.
- At 70% billable utilization: billable hours = 1,880 × 0.70 = 1,316 hours.
- Hourly rate = $195,000 / 1,316 ≈ $148.18/hr; Day rate = $148.18 × 8 ≈ $1,185.44/day.
Required hourly rate ≈ $148.18/hr and day rate ≈ $1,185.44/day.
Common mistakes to avoid
- Setting utilization at 100% and assuming all 52 weeks are billable, ignoring vacations, holidays, sales time, and admin that typically reduce billable time to 60-75% of capacity.
- Omitting self-employment tax (roughly 15.3%) and benefits costs from the overhead rate, which forces underpricing and earning far less than the equivalent salaried income.
- Calculating rates on desired take-home pay rather than gross revenue needed, forgetting that business expenses, taxes, and non-billable hours must all be covered by the hourly rate.
Key terms
- Billable Utilization Rate
- The fraction of total working time that is spent on fee-earning client work and can be invoiced.
- Overhead
- Business costs and taxes that must be covered before the consultant takes home net income; typically includes self-employment tax, benefits, insurance, and non-billable time.
- Day Rate
- The fee charged for a full day of consulting work, usually equal to the hourly rate multiplied by the number of hours in a working day.
- Net Income
- Take-home pay after all business expenses and taxes have been deducted from gross revenue.
Frequently asked questions
- What billable utilization should I assume?
- Most solo consultants realistically bill 50-65% of available working hours. The rest goes to business development, proposals, and admin. With a long-term retainer, 70-75% may be achievable.
- How do I account for benefits in my rate?
- Add health insurance premiums, retirement contributions, and paid time off costs to your overhead. A common rule is to add 20-30% to target income to cover benefits an employer would otherwise provide.
- Should I use hourly or project-based fees?
- Hourly rates protect you if scope expands but can cap earnings. Project fees reward efficiency and give clients cost certainty. Use the hourly rate from this calculator as a floor when pricing fixed-fee engagements.