How Pricing Works
Every formula used in this calculator, in plain language.
1. Sustainable hourly rate
- Monthly working hours = working days × hours per day
- Monthly billable hours = working hours × billable %
- Required revenue = (take-home income + overhead) ÷ (1 − tax % − reserve %)
- Hourly rate = required revenue ÷ billable hours
Example (illustrative): 20,000 + 3,000 ÷ 0.8 = 28,750 ÷ 84 billable hours ≈ 342 / hour.
2. Project hours
- Quantity task hours = quantity × hours per unit
- Planned hours = enabled task hours + revision hours
- Total hours = planned hours × (1 + time contingency %)
Time contingency is applied once, to hours only. It is never added again to the price.
3. Pricing baseline
- Labor value = total hours × hourly rate
- Baseline = (labor + direct expenses + rush costs) × (1 + financial risk %)
Financial risk is optional and only for a different risk than time overruns (e.g. late payment).
4. Scenarios, fees and margin
- Minimum = baseline ÷ (1 − fee %)
- Recommended = baseline ÷ (1 − margin %) ÷ (1 − fee %)
- Margin % = contribution ÷ revenue after fees
A 20% margin is not a 20% markup: on a 1,000 baseline, 20% margin gives 1,250 (not 1,200). Your baseline already includes your own pay, so the gap between price and cash costs is not pure profit.
5. Monthly retainer
- Monthly hours = (deliverables × hours each + meetings × hours each + reporting + revisions + support) × (1 + contingency)
- Monthly baseline = monthly hours × rate + monthly tools
- Contract value = recommended monthly fee × months + optional setup fee
Recurring tools are monthly costs; setup expenses are one-time and compared against the setup fee.
This is a simplified planning model, not tax or financial advice. Suggested hours are illustrative planning assumptions, not verified market benchmarks.
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