Working out what to charge an hour
Start from what you need to earn in a year, add what it costs to operate, then divide by the hours you can actually bill, not the hours you work. Most people divide by 2,000 and wonder why the year does not add up: holiday, sickness, admin, quoting and chasing payment are all real hours that nobody pays for.
The Salary Calculator converts between a yearly figure and what it works out at per hour. Salary Calculator
Billable hours are not working hours
A full-time year is often quoted as about 2,000 hours. Take off holiday and public holidays and you are nearer 1,800.
Then take off the time nobody pays for: quoting, invoicing, bookkeeping, marketing, training, and the gaps between jobs. Many independent trades and freelancers bill closer to half the hours they work.
Dividing by the larger number is what produces a rate that looks fine and leaves nothing at the end of the year.
Add what it costs to exist
Tools, software, insurance, phone, vehicle, accountant, workspace.
Anything you must pay whether or not you work that month belongs in the rate, spread across the hours you expect to bill.
Sense-check it against the job
A rate is only useful if the work supports it. Price a typical job at your rate and ask whether a customer would agree to that figure.
If not, the answer is usually fewer, better-paid hours rather than a lower rate spread across more of them.
Questions people ask next
Should my rate match what an employee earns?
Not directly. An employed salary comes with paid holiday, sick pay, equipment and often a pension contribution. Working for yourself, the rate has to fund all of that out of billable hours alone.
How do I raise a rate with an existing customer?
Give notice, put it in writing, and apply it from a stated date rather than mid-job. Raising it on the invoice without warning is the version that loses the customer.