How to Calculate Your Hourly Rate As a Business Owner

Jeff Pape
Jun 13
2 min read

Updated: Jun 17

Use This Hourly Rate Calculator to Reverse-Engineer Your Pricing

One of the biggest shifts working for yourself and billing by the hour is what do you really need to charge to replace your salary as an employee. Chances are it's more than you think you need to charge. Whether you’re a marketing strategist, inventory optimization consultant, or fractional CFO, you need a clear way to determine your hourly rate.

To simplify that process, I built a Google Sheet Hourly Rate Calculator you can copy and customize. This tool helps two key audiences:

Consultants: Set your target salary and back into a profitable hourly rate based on time off, overhead, and expected billable hours.
Business Owners: Understand what a $75/hour consultant really costs you in terms of annual salary equivalent.

💼 For Consultants: What Should You Charge?

Let’s say your income goal is $150,000 per year. You work solo, manage your own marketing, and want 30 days off per year (vacation, holidays, sick time). You also have modest overhead—around $500/month for software, tools, and basic office expenses.

The key levers in the calculator:

Target salary
Benefits load (suggested 25%)
Monthly overhead
Paid time off
Maximum billable hours per week

With these assumptions, the calculator outputs a range:

If you bill 70% of your time → $150/hour
If you bill 50% of your time → $210/hour

That’s the real math behind hourly consulting rates. Want more time off or have higher expenses? Adjust accordingly.

🏢 For Employers: What Are You Really Paying?

Let’s flip it. You’re a business owner hiring a fractional expert at $75/hour.

At first glance, that feels fair. But what’s the actual salary equivalent?

Using the same assumptions above (benefits, time off, overhead), that $75/hour rate breaks down to:

$50,400/year (if 50% billable)
$72,480/year (if 70% billable)

That’s less than many realize, especially if you're expecting high-level strategic work. It also gives you clarity when negotiating freelance vs. full-time offers.