Transparent by design
Methodology, formulas, and data sources
The calculators use deterministic arithmetic. No language model chooses your price, tax rate, margin, or market position.
Contractor rate formula
The rate calculator begins with one of two personal compensation targets:
Salary mode: owner gross target = comparable employee salary
It then calculates a benefits reserve and combines that with annual overhead:
Operating need = owner gross target + benefits reserve + annual overhead
The operating need is grossed up for a profit/cash buffer and a payment-loss allowance:
Annual billable hours = working weeks × billable hours per week
Minimum sustainable rate = annual revenue target ÷ annual billable hours
Target quoting rate = minimum sustainable rate × (1 + target quote cushion)
The target quoting rate is a planning guardrail, not a statement about what clients will pay. Specialization, urgency, value, competitive alternatives, geography, relationship risk, and contract terms may justify a different rate.
Benefits public-data reference
The U.S. Bureau of Labor Statistics reported that private-industry benefits represented 30.1% of total employer compensation in March 2026, while wages and salaries represented 69.9%. Expressed relative to wages, the full aggregate benefits loading is approximately 43.1% (30.1 ÷ 69.9). The site's default is lower because the BLS category includes paid leave and legally required benefits, while the calculator separately reduces working weeks and asks for a tax reserve. Users should replace the default with a deliberate personal estimate.
Bureau of Labor Statistics: Employer Costs for Employee Compensation, March 2026 →
Project quote formula
Direct costs = project expenses + subcontractor cost
Contingency = (labor + direct costs) × contingency percentage
Rush premium = labor × rush premium percentage
Net target = labor + direct costs + contingency + rush premium
Gross quote = (net target + fixed processing fee) ÷ (1 − percentage processing fee)
The contingency is shown separately so it cannot be mistaken for hidden profit. A written scope and change-control process remain essential.
Retainer formula
Capacity premium = base value × capacity premium percentage
Term discount = (base value + capacity premium) × discount percentage
Net target = base value + capacity premium − term discount
Monthly retainer = (net target + fixed payment fee) ÷ (1 − percentage payment fee)
The effective retainer rate is calculated after processing fees across all committed delivery and support hours. The calculator compares that result with an optional minimum safe rate.
Effective hourly rate formula
Net income before reserve = revenue − direct expenses − payment fees
Net effective rate = net income before reserve ÷ total time
After-reserve rate = [net income before reserve − planning tax reserve] ÷ total time
Delivery utilization = delivery hours ÷ total time
Payment fee formulas
Net received = gross charge × (1 − total percentage fee) − fixed fee
When desired net is known:
Gross charge = (desired net + fixed fee) ÷ (1 − total percentage fee)
Simply adding the provider's percentage to a desired net amount does not fully offset the fee because the fee is applied to the larger gross amount.
Payment fee presets
| Preset | Rate included in site | Scope and source |
|---|---|---|
| Stripe U.S. domestic online card | 2.9% + $0.30 | Stripe pricing; additional card, international, conversion, billing, or platform fees may apply. |
| Square U.S. online payment | 3.3% + $0.30 | Square pricing; account and product pricing may differ. |
| PayPal U.S. standard card payment | 2.99% + $0.49 | PayPal merchant fees. |
| PayPal Checkout U.S. | 3.49% + $0.49 | PayPal merchant fees. |
Preset data was last reviewed August 20, 2026. The site operator should recheck it at least quarterly and immediately after a provider announces pricing changes.
Project profitability formula
Actual labor cost = actual hours × internal hourly cost
Direct costs = actual labor cost + subcontractor cost + other expenses
Contribution profit = net revenue − direct costs
Contribution margin = contribution profit ÷ client price
Break-even price = (direct costs + fixed fee) ÷ (1 − percentage fee)
Target price = (direct costs + fixed fee) ÷ (1 − percentage fee − target margin)
Contribution profit excludes business-wide overhead unless the user incorporates overhead into the internal hourly cost or direct expenses. It is therefore not equivalent to accounting net income.
How the defaults were chosen
The example values represent a plausible independent professional scenario, not population averages and not personalized recommendations. They are meant to produce a useful first screen while prompting the user to replace each assumption:
- 46 working weeks and 25 billable hours per week acknowledge vacation, illness, holidays, business development, and administration.
- A 20% benefits and retirement reserve is intentionally below the full BLS aggregate loading to reduce obvious double counting; it is not a normative target.
- A 10% profit/cash buffer and 15% target quote cushion are planning conventions rather than public statistics.
- A 25% tax reserve is an example only and may be materially wrong for a particular person, entity, location, deduction profile, or income level.
Quality-control and update policy
- Core formulas are implemented as pure JavaScript functions with automated tests.
- Invalid or mathematically impossible percentage combinations are rejected.
- Calculator math runs in the browser. Site analytics, advertising, affiliate tracking, forms, and other third-party services may separately process technical or interaction data as described in the Privacy Policy.
- Provider fee presets should be reviewed quarterly; sources and review date are displayed publicly.
- Material formula changes should be documented in a visible version history before deployment.