Worked example: $120K target, 1,200 billable hours
Grossing up for 30% tax means needing $171,429 plus $12,000 overhead — $183,429 of revenue. Over 1,200 hours the breakeven is $152.86; with a 20% margin the floor rate is $191. Quote $195–$225 and you have room for the occasional discount without eating the margin.
- • Raise rates 10–20% on every new client; grandfather old ones for a cycle, then move them.
- • Value pricing beats hourly when the outcome is measurable — use this rate as the floor, not the ceiling.
- • If prospects never push back on price, the rate is too low.
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Read the guideFAQ
How do I calculate my hourly rate from a salary?
Gross the salary up for taxes (divide by 1 − tax rate), add business overhead, divide by realistic billable hours (usually 1,000–1,400), then add profit margin. A $100K salary target typically yields a $130–$170/hr floor.
How many hours can a consultant actually bill?
Rarely more than 60–70% of working time. Sales, invoicing, admin, learning, and vacation consume the rest. Planning around 2,000 billable hours is the most common pricing error.
Should I charge hourly or per project?
Per project when you can estimate scope and the outcome is valuable — you keep the efficiency gains. Hourly when scope is fuzzy or the client controls the workload. Either way, know your floor rate.
When should I raise my rates?
When you're booking out 3+ weeks ahead, losing fewer than half of proposals on price, or annually at minimum. Existing clients get notice; new clients get the new number today.
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