The rate that actually clears it
Billable hours are not working hours. Sales, admin and the gaps between contracts are real and unpaid, which is why a rate derived from a full year quietly loses money all year.
The rate that actually clears your target
Billable hours are not working hours, and the gap between them is why a rate derived from a full year quietly loses money.
How the rate is built up
What utilisation does to it
How the rate is derived
revenue needed = (target + costs) ÷ (1 − set-aside)
rate = revenue needed ÷ (billable hours a week × weeks worked)
The set-aside is a planning allowance you choose, not a tax calculation. Toolsfully does not compute anyone's liability — that needs jurisdiction and year-specific data, and a wrong figure about someone's tax is worse than none.
The break-even rate covers your business costs alone and pays you nothing.
2,080 hours is the mistake
Dividing a target income by a full-time year gives a rate that feels reasonable and does not work. A full-time year has no sales in it, no admin, no invoicing, no proposals that went nowhere, no learning, and no gaps between contracts.
Realistic utilisation for a solo consultant is somewhere between 50% and 65% of a full-time year. The rate that clears your target at 55% utilisation is nearly twice the naive figure, and that difference is the whole business.
Costs are not optional
Equipment, software, insurance, accounting, professional bodies, training, a workspace, and the pension nobody is contributing to on your behalf. These come out before anything reaches you, and they are the second thing people leave out.
Comparing a rate with a salary
A salary includes paid leave, sick pay, employer pension contribution, equipment and the absence of unbilled time. Comparing an hourly rate to a salaried hourly equivalent on hours alone will always flatter the rate.
Starting from what you need to clear, as this does, is the more honest direction — and it usually produces a higher number than people expect to charge.
Why there is no tax calculation
The set-aside is a percentage you choose to hold back. It is not a computed liability, and it does not know your jurisdiction, your structure, your allowances or your year.
Getting that wrong produces a number people plan around, so we would rather publish a clearly-labelled allowance than a confident wrong figure.