Scope
Assumptions and limits
This is a pricing-planning tool, not tax, accounting, legal or market-rate advice. Your scope and contract remain authoritative.
Results use the values you enter and the conventions described in the methodology below. After calculating, review the result-specific assumptions and warnings shown with the estimate.
Explore business and document tools for related tasks in this collection.
01
Billable time versus working time
Available work hours are working weeks multiplied by working hours per week. Billable hours apply the chosen utilisation percentage; the rest covers sales, administration, learning and other work that still consumes capacity.
With 46 weeks, 40 hours per week and 60% billable utilisation, annual capacity is 1,840 working hours but only 1,104 billable hours.
02
How the recommended rate is built
After-tax targets are grossed up by dividing by one minus the planning tax reserve. Expenses and benefits are added, the risk buffer is applied, then payment fees are grossed up by dividing by one minus the fee rate.
Using a 60,000 after-tax target, 25% reserve, 18,000 of costs and benefits, 10% buffer and 3% fee produces annual billings of 111,134.02 and an hourly rate of 100.66 at 1,104 billable hours.
03
Project pricing and limitations
Project quotes combine delivery, discovery, administration and revision hours with direct expenses, contingency, optional uplift and payment-fee gross-up. Rounding happens only after the unrounded quote is calculated.
The market may not accept every calculated rate. This tool does not calculate actual tax and cannot replace a proposal, scope or contract.
FAQ
Frequently asked questions
What is a realistic billable percentage?
It depends on demand and operating model; test several scenarios rather than assuming 100%.
Does this calculate actual tax?
No. Tax reserve is only a planning assumption.
How should I price revisions?
Estimate included revision hours explicitly and define additional work in the contract.
Can contractors and agencies use it?
Yes, if they adapt capacity, cost and buffer assumptions.
Why gross up payment fees?
Because the fee is charged on billed revenue, so simply adding the percentage understates the required billing.
Sources
Method references and scope
- U.S. Small Business Administration — Calculate startup costs
- IRS — Self-employed individuals tax center
Method: results come from tested code using the documented method and assumptions shown on this page.
Review owner: Great Future Product Engineering.
Method and content last reviewed: . Next review due: .