How to Evaluate Your Contractor Rate
Freelancers and contractors often quote project fees without knowing their effective hourly rate. This calculator breaks down any project fee into an hourly rate and compares it to standard monthly equivalents โ so you can decide if a project is worth your time.
Formulas Used
- Effective Hourly Rate = Project Fee รท Total Hours
- Monthly Equivalent = Hourly Rate ร Hours per Month
As a general rule, contractors should earn 1.5โ2ร their comparable salaried rate to account for taxes, benefits, and unpaid time between gigs.
Frequently Asked Questions
Use 160 hrs/mo (40 hrs/wk ร 4 weeks) to compare against a standard full-time salary. Use your actual hours if you want to see how this project pays per month of effort.
Yes. As a 1099 contractor, you pay ~15.3% in SE taxes plus income tax. Mentally reduce your effective rate by 15โ25% for an after-tax comparison with salaried income.
Extra hours not in the original estimate reduce your effective hourly rate. Always include a buffer for revisions or define a maximum revision policy in the contract.