Day rate needed to match a target annual income after overheads.

A contractor targeting 80,000 a year with 180 billable days and 20% overhead needs to charge roughly 556 a day. Quote a third less and you're effectively earning well below your target once the year averages out.

How to use it

Enter the annual income you want to take home (before income tax — this is gross contractor revenue minus overheads, not net take-home pay). Then estimate billable days a year: start from 260 working days, deduct holiday, training, admin, and expected dry periods. A realistic figure is 180–220 for most contractors. Finally, add a percentage for overheads — insurance, accountant, tools, co-working, software, professional development.

What the result means

The day rate is the minimum it helps to charge to hit your target. Below this rate, you're subsidising the client. It's the floor for negotiation, not the ceiling.

Things this doesn't cover

Income tax, payroll taxes or self-employment tax are excluded — those depend on your jurisdiction and structure. Add your expected tax rate on top if you want a net take-home figure.

Run it with sensible defaults

Using annual income target of 80,000, billable days per year of 180, overhead percentage of 20%, the calculation works out to 555.56. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Annual Income Target, Billable Days per Year, and Overhead Percentage — do not pull with equal force. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

How the math works

Target revenue is divided by billable days and adjusted upwards for the overhead share of revenue. The formula assumes overhead scales with revenue — reasonable for percentage-based costs (accountant, insurance tiers) but approximate for fixed costs (software subscriptions). The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".

Why small rate shifts add up

A 3% pay rise looks modest. Apply it over a 30-year career with modest promotions and the lifetime difference runs to six figures. This calculator makes that invisible compounding visible in a way spreadsheets usually don't.

What this doesn't capture

Tax bands, pension contributions, student-loan deductions, and benefits-in-kind sit outside this calculation. The figure is the headline; your actual position depends on local tax rules and personal circumstances. Pair with a dedicated take-home calculator for the full picture.