Consultant Pay Rate Calculator
Work back from a client bill rate to the pay rate, with margin and markup kept apart.
What this calculator does
Margin and markup are treated as two different calculations and the user chooses which applies. The calculator never converts one into the other silently.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Client bill rate per hour
- — number value.
- Pricing method
- — Margin is a share of the price. Markup is an addition to cost. They are not the same number..
- Margin or markup
- — Read as a share of the bill rate for margin, or of cost for markup..
- Employer burden on pay
- — Benefits, taxes and insurance as a percentage of pay. Leave at 0 for a contractor paid gross..
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Cost per hour = Bill rate × (1 − Margin) for a margin, or Bill rate ÷ (1 + Markup) for a markup; Pay rate = Cost per hour ÷ (1 + Employer burden)
Worked example
$150 bill rate at a 35% margin
Margin and markup are shown separately so they are never confused.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: OpenStax — Principles of Accounting, Volume 2: Managerial Accounting
Last reviewed:
Common questions
Formula, source and verification
The chosen pricing method is inverted to recover cost, then employer burden is removed to leave pay.
The question it answers: If the client pays this rate, what can we pay the consultant and still make our margin?
The formula
Cost per hour = Bill rate × (1 − Margin) for a margin, or Bill rate ÷ (1 + Markup) for a markup; Pay rate = Cost per hour ÷ (1 + Employer burden)
- R — Client bill rate
- (currency/h). Rate charged to the client.
- m — Margin
- (%). Share of the bill rate kept as gross profit.
- k — Markup
- (%). Percentage added to cost to reach the bill rate.
- b — Employer burden
- (%). Benefits, taxes and insurance as a percentage of pay.
Units: Currency per hour; percentages.
What kind of calculation this is
Business input model. The answer depends on business figures only you can supply, such as your own costs, rates or volumes. No market or benchmark values are assumed for you.
Method
Margin and markup are treated as two different calculations and the user chooses which applies. The calculator never converts one into the other silently.
Assumptions built into the result
- Mathematical: The margin or markup entered applies to this engagement only.
Figures this calculator will never guess for you
- No standard agency margin is assumed.
- No fixed multiple of salary is used.
Limitations
- Shows the pay rate implied by the inputs; it does not say what a consultant will accept.
Source and version
- Standard or reference
- Margin and markup on cost (OpenStax, Principles of Accounting Volume 2: Managerial Accounting — cost-plus pricing, margin and markup.)
- Published source
- OpenStax — OpenStax (CC BY)
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
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