How do I calculate my consulting rate?

Take your desired annual income plus business expenses, multiply by (1 + buffer margin), and divide by realistic billable hours per year. Most independent consultants bill 25 hours per week × 48 weeks = 1,200 hours.

Why is my hourly higher than what I'd earn employed?

You're covering your own benefits, taxes, software, equipment, sick days, vacation, and the unpaid time you spend selling and doing admin. A $100K salaried role typically requires $150K+ in self-employed income to match.

When should I move from hourly to retainer?

When the engagement is longer than two weeks and the client values predictability. Charge weekly × 4 × 0.85 (a 15% discount for the commitment) as a monthly retainer.

What Should I Charge as a Consultant?

The honest math behind a consulting rate — including the 40-hour-week myth and why your number probably needs to go up.

The 40-hour week is a lie

A full-time consultant who tells you they bill 40 hours a week is either lying or about to burn out. The realistic number is 20–30 hours of billable work per 40-hour week. The rest goes to sales, proposals, admin, learning, and recovery.

The formula

Hourly rate = (target income + business expenses) × (1 + buffer) ÷ billable hours per year

Pick numbers you'd actually accept. Then halve the hours you think you'll bill.

Worked example

Target income: $90,000
Business expenses: $12,000 (software, accountant, insurance, hardware, courses)
Buffer: 15% (for slow months, taxes you didn't expect)
Billable: 25 hours × 48 weeks = 1,200 hours

($90,000 + $12,000) × 1.15 = $117,300 ÷ 1,200 = $98/hour.

Why this is higher than your employed salary

An employer pays for benefits, half your payroll taxes, your sick days, your equipment, your training, and the time you spend in meetings instead of selling. As a consultant, you're paying all of that yourself. A $100K salaried role typically requires $150K+ in consulting revenue to match.

Daily, weekly, monthly

Convert your hourly into bigger blocks for clients who want predictability:

Daily = hourly × 8
Weekly = hourly × 40
Monthly retainer = weekly × 4 × 0.85 (a 15% discount for committed scope)

When to raise your rate

You're booked more than 8 weeks out
You've never lost a deal on price
You haven't raised in 12+ months
Your scope is growing without your rate growing

The single biggest mistake

Quoting hourly on a fixed-scope project. Hourly rewards your slowness and punishes your skill. Quote per project for fixed-scope work; quote retainer for ongoing work; reserve hourly for ad-hoc and discovery.