Factor in self-employment taxes, private healthcare, paid time off, and non-billable hours into your contractor rate.
Calculate the contracting rate you need to charge to cover all costs and hit your income target.
A contractor rate calculator finds the billing rate an independent contractor needs to charge to cover all costs and achieve their income target. It factors in business expenses, taxes, non-billable time, and desired net income.
Unlike an employee salary, a contractor's rate must cover everything: income tax, professional indemnity, tools, and gaps between contracts.
Direct costs include professional indemnity insurance, tool subscriptions, and equipment. Overhead includes marketing, accounting fees, and professional development. Tax provision should be 20-30% of income depending on your tax bracket.
Forgetting any of these leads to a rate that looks good but leaves you short at tax time.
An employee earning 12 lakh per year has their PF, healthcare, and other benefits covered by the employer. A contractor earning the equivalent rate must cover all these from their rate.
A simple rule: your contracting rate should be at least 1.4 to 2 times what you would earn as an equivalent employee, depending on your specific cost structure.
Enter your target annual income, annual business expenses, estimated tax rate, and number of billable days or hours. The calculator shows the minimum rate needed.
Compare the output to market rates and adjust your positioning accordingly.
Never apologise for your rate. A professional contractor who understands their value will state their rate confidently. If the client pushes back, understand whether it is a budget issue or a value perception issue and address it accordingly.
Use the Tez Invoice free quotation or invoice generator to present your rate professionally.
Tez Invoice is our free online invoice generator. No sign up. No watermark. Download clean PDF or JPEG invoices in seconds, right from your browser.
Common questions about Contractor Rate Calculator: Find Your Billing Rate as an Independent Contractor on Tez Invoice.
Target income plus taxes, insurance, business expenses, non-billable time, and income gaps between contracts.
Typically 1.4 to 2 times the equivalent employee salary to cover taxes and benefits you fund yourself.
Yes. Free with no sign up.
Contractors pay their own income tax and self-employment tax. Provision 20-30% of rate for taxes.
Yes. Professional indemnity and other insurance premiums are a cost of being a contractor.
Yes. Completely free with no sign up and no usage limits.
Yes. Fully responsive on all devices.
No. All processing is in your browser. Nothing is sent to any server.
Yes. Designed for freelancers and businesses.
Use the free Invoice Generator on Tez Invoice.