Contractor Day Rate Calculator
The calculator works backwards from the money you actually want.
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How to use this calculator
- Enter the annual income you want to take home and the number of days you can realistically bill in a year (a common figure is around 220 after weekends, leave, public holidays and admin).
- Optionally add your annual business expenses/overheads (software, insurance, equipment) and a desired profit margin to build a buffer on top.
- Read off the required day rate and its equivalent hourly rate, then sanity-check it against rates in your market.
How it works
The calculator works backwards from the money you actually want. It adds your target take-home income to your annual business expenses to get a cost base, then divides that across the number of days you can bill to find the rate each of those days must earn.
The formula is: revenue needed = (income + expenses) / (1 − margin/100), and day rate = revenue needed ÷ billable days. Dividing by (1 − margin/100) marks the rate up so the profit margin sits on top of your costs rather than being eaten into. The hourly figure simply divides the day rate by an 8-hour day.
Worked example
Turning an 80,000 income target into a day rate. You want 80,000 a year in your pocket and expect 220 billable days (allowing for weekends, leave, holidays and admin time). You have 10,000 of annual business expenses and want no extra profit margin. Cost base = 80,000 + 10,000 = 90,000. With a 0% margin the revenue needed stays 90,000, so day rate = 90,000 / 220 = 409.09 per day (about 51.14 per hour on an 8-hour day).
Common mistakes
- Using 260 or 365 as billable days. You cannot bill weekends, annual leave, public holidays, sick days or admin/marketing time — most full-time contractors bill closer to 200–230 days a year.
- Forgetting business expenses and tax. This tool sizes revenue to cover your take-home target plus overheads, but it does not deduct income tax or super/pension — set your income target as a true take-home figure or add tax to expenses.
- Confusing a profit margin with a markup. Entering the margin as a percentage of the final price (which this tool uses) is not the same as adding that percent to costs; a 20% margin needs a larger uplift than a 20% markup.
Frequently asked questions
How many billable days should I assume in a year?
Start from 365 days, remove ~104 weekend days, then subtract annual leave, public holidays, sick days and non-billable admin/marketing time. Most full-time contractors land between 200 and 230 billable days. Using a realistic (lower) number gives a more sustainable rate.
Does this include tax or superannuation?
No. The tool converts your target income and expenses into a required rate but does not model income tax, GST/VAT, super or pension. Either set your income target as a genuine take-home figure, or fold your expected tax and contributions into the annual expenses field.
What is the difference between the day rate and the hourly rate shown?
The hourly rate is simply the day rate divided by an 8-hour day, offered as a cross-check. If your standard day is 7.5 or 10 hours, adjust the hourly figure yourself — the day rate is the primary output.
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Tip: Enter any known values to calculate the remaining results.
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