Act on the result
Use the rate as a commercial floor, not a market-rate claim.
Educational only: Business decision support, not accounting, tax or legal advice.
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Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
What this planner helps you decide
Best for
Independent professionals translating an annual cost base into a rate.
Outputs
Annual cost base, cost rate, minimum contract rate, revenue and contribution.
Start here
Enter annual costs and realistically billable hours on one period basis.
Use a different tool when: Do not use this to set a blended team rate; use Agency Blended Rate Planner for that decision. Use this tool to convert an annual cost base to a contract rate.
Quote & capacity
Salary to Contract Rate: annual cost base
Annual cost base, cost rate, minimum contract rate, revenue and contribution.
Amounts use the same currency as your inputs. No currency conversion is performed.
Salary to Contract Rate
Convert an annual cost base into a sustainable contract rate.
Your numbers stay in this browser
Comparable annual salary.
Benefits and employment costs.
Business costs to recover.
Realistically billable hours.
Contribution retained.
Decision result
Every result is derived by the registered service and project engine.
PDF and CSV exports stay on this device. Clean page links contain no inputs.
- Annual Cost Base
- 150,000/year
- Cost Rate
- 100/hour
- Minimum contract rate
- 125/hour
- Annual Revenue At Minimum
- 187,500/year
- Annual Contribution At Minimum
- 37,500/year
Scenario comparison
Each row names the assumption axis changed from the baseline.
ScenarioResultDifference
Current scenario125/hourBaseline
Lower Annual billable hours131.58/hour+6.58/hour (+5.3%)
Higher Annual billable hours119.05/hour−5.95/hour (−4.8%)
Save these results, change an input, then compare the updated figures with this baseline.
The baseline is temporary in this tab and is not added to shared scenario links or generated reports.
Calculation details
View calculation detailsView the formulas and inputs used for these results.
Minimum contract rate
Minimum Contract Rate
cost rate ÷ (1 − target margin)125/hourResult125/hour
Reports/hour from the entered project, capacity and ex-tax commercial assumptions. The engine retains full precision; presentation is bounded for readability.
Salary to Contract Rate Planner formulas →Inputs used by these formula steps
- Minimum Contract RateAnnual Salary
- 100,000
- Minimum Contract RateAnnual Employment Oncosts
- 20,000
- Minimum Contract RateAnnual Business Overheads
- 30,000
- Minimum Contract RateAnnual Billable Hours
- 1,500
- Minimum Contract RateTarget Margin
- 0.2
Annual Cost Base
Annual Cost Base
salary + employment on-costs + overheads150,000/yearResult150,000/year
Reports/year from the entered project, capacity and ex-tax commercial assumptions. The engine retains full precision; presentation is bounded for readability.
Salary to Contract Rate Planner formulas →Inputs used by these formula steps
- Annual Cost BaseAnnual Salary
- 100,000
- Annual Cost BaseAnnual Employment Oncosts
- 20,000
- Annual Cost BaseAnnual Business Overheads
- 30,000
- Annual Cost BaseAnnual Billable Hours
- 1,500
- Annual Cost BaseTarget Margin
- 0.2
Cost Rate
Cost Rate
annual cost base ÷ annual billable hours100/hourResult100/hour
Reports/hour from the entered project, capacity and ex-tax commercial assumptions. The engine retains full precision; presentation is bounded for readability.
Salary to Contract Rate Planner formulas →Inputs used by these formula steps
- Cost RateAnnual Salary
- 100,000
- Cost RateAnnual Employment Oncosts
- 20,000
- Cost RateAnnual Business Overheads
- 30,000
- Cost RateAnnual Billable Hours
- 1,500
- Cost RateTarget Margin
- 0.2
Annual Revenue At Minimum
Annual Revenue At Minimum
minimum contract rate × annual billable hours187,500/yearResult187,500/year
Reports/year from the entered project, capacity and ex-tax commercial assumptions. The engine retains full precision; presentation is bounded for readability.
Salary to Contract Rate Planner formulas →Inputs used by these formula steps
- Annual Revenue At MinimumAnnual Salary
- 100,000
- Annual Revenue At MinimumAnnual Employment Oncosts
- 20,000
- Annual Revenue At MinimumAnnual Business Overheads
- 30,000
- Annual Revenue At MinimumAnnual Billable Hours
- 1,500
- Annual Revenue At MinimumTarget Margin
- 0.2
Annual Contribution At Minimum
Annual Contribution At Minimum
annual revenue at minimum − annual cost base37,500/yearResult37,500/year
Reports/year from the entered project, capacity and ex-tax commercial assumptions. The engine retains full precision; presentation is bounded for readability.
Salary to Contract Rate Planner formulas →Inputs used by these formula steps
- Annual Contribution At MinimumAnnual Salary
- 100,000
- Annual Contribution At MinimumAnnual Employment Oncosts
- 20,000
- Annual Contribution At MinimumAnnual Business Overheads
- 30,000
- Annual Contribution At MinimumAnnual Billable Hours
- 1,500
- Annual Contribution At MinimumTarget Margin
- 0.2
Inputs used
- Annual salary equivalent
- 100,000
- Annual employment on-costs
- 20,000
- Annual business overheads
- 30,000
- Annual billable hours
- 1,500
- Target margin
- 0.2
Open this calculator with preset values
This calculator supports documented, shareable scenario URLs. Compatible assistants and applications can construct links using the parameters below.
Scenario links contain only allowlisted numeric and closed-choice inputs shown in the URL; Margin101 excludes free text and identifying fields. Anyone you share the URL with can read those numbers, so do not include private or identifying data.
| Parameter | Meaning | Unit | Allowed values | Presence | Default |
|---|---|---|---|---|---|
| annualBillableHours | Realistically billable hours. | hours/year | 0 to 10000000 | Required | 1500 |
| annualBusinessOverheads | Business costs to recover. | currency units/year | 0 to 10000000 | Required | 30000 |
| annualEmploymentOncosts | Benefits and employment costs. | currency units/year | 0 to 10000000 | Required | 20000 |
| annualSalary | Comparable annual salary. | currency units/year | 0 to 10000000 | Required | 100000 |
| targetMargin | Contribution retained. | proportion of contract revenue retained as contribution | 0 to 0.99 | Required | 0.2 |
Salary to Contract Rate: annual cost base
The salary to contract rate result uses only the entered commercial assumptions.
Formula summary
- Primary formula
- minimum contract rate = annual cost base ÷ billable hours ÷ (1 − target margin)
Data used here
- The estimate uses your inputs and the general business formula documented in the methodology.
Decision checks
Stress-test the decision
Reduce billable hours before relying on the minimum rate.
When this estimate can be misleading
- Results depend on the accuracy and consistent basis of user-entered assumptions.
- The planner does not forecast demand, delivery performance or contract outcomes.
- Use the result as educational business decision support, not accounting, tax or legal advice.
- The salary to contract rate result uses only the entered commercial assumptions.
Educational estimate, not advice. See all assumptions & limitations →
Related reading
Guides to interpret the decision and its assumptions.
- Employee vs Contractor: Economics Before Classification
Compare like-for-like economics and operating trade-offs before a separate jurisdictional legal classification.
Read guide
Frequently asked questions
How do I convert an annual cost base to a contract rate?
Use the rate as a commercial floor, not a market-rate claim.
Which planning assumptions should I stress-test?
Compare a plausible alternative scenario and verify the decision-critical assumption that changes the plan most.