3 ms·

So if you want to make $120,000 year, your hourly rate would be $120. And when you're considering what you think your annual income should be keep in mind that

So if you want to make $120,000 year, your hourly rate would be $120. And when you're considering what you think your annual income should be keep in mind that you have to cover your own vacation, insurance, self-employment tax (depending on where you file), and assorted other expenses.

lrobb 15y ago
Correct... and that rule of thumb factors that into account.
- jamesbritt 15y ago
  How many billable hours a day does this assume? Most people won't be doing 8 hours a day, five days a week, like a regular job. If we assume 4 hours a day, five days a week, 50 weeks a year of billable time you'll need to up the rate to make that amount as in-your-pocket cash.
  - manmal 15y ago
    Some quick math says: ~83h/month = 4.15h/day (conservative approx. - assuming 4 workweeks / month and 5 workdays / week) I think this rule of thumb works pretty well, factoring in some holidays or illnesses.
  - infinite8s 15y ago
    The factor of 1000 assumes a 4 hr, 5 day week. The typical way of figuring out your hourly rate (given a fixed salary) is to divide by 2000 = 50 weeks (assuming 2 weeks vacation) * 40hr/week.
    - jamesbritt 15y ago
      The factor of 1000 assumes a 4 hr, 5 day week. 50 * 5 * 4 * 120 = 120,000.00 That's what the clients will be giving you. Out of that comes insurance and self-employment tax and additional social security (in the USA, as an example). If you are working backwards from a fixed salary you have to also add in the dollar value of additional taxes and insurance, plus whatever other benefits you might be getting. $120K salary at a regular job > $120K in paid invoices from clients. If you're a consultant or contractor or whatever, even if you work 8 hours a day they are not all billable hours. There's the tedious business work to look after (record keeping, business development, etc.)

3 ms·

So if you want to make $120,000 year, your hourly rate would be $120. And when you're considering what you think your annual income should be keep in mind that

by jamesbritt 15y ago

lrobb 15y ago
Correct... and that rule of thumb factors that into account.
- jamesbritt 15y ago
  How many billable hours a day does this assume? Most people won't be doing 8 hours a day, five days a week, like a regular job. If we assume 4 hours a day, five days a week, 50 weeks a year of billable time you'll need to up the rate to make that amount as in-your-pocket cash.
  - manmal 15y ago
    Some quick math says: ~83h/month = 4.15h/day (conservative approx. - assuming 4 workweeks / month and 5 workdays / week) I think this rule of thumb works pretty well, factoring in some holidays or illnesses.
  - infinite8s 15y ago
    The factor of 1000 assumes a 4 hr, 5 day week. The typical way of figuring out your hourly rate (given a fixed salary) is to divide by 2000 = 50 weeks (assuming 2 weeks vacation) * 40hr/week.
    - jamesbritt 15y ago
      The factor of 1000 assumes a 4 hr, 5 day week. 50 * 5 * 4 * 120 = 120,000.00 That's what the clients will be giving you. Out of that comes insurance and self-employment tax and additional social security (in the USA, as an example). If you are working backwards from a fixed salary you have to also add in the dollar value of additional taxes and insurance, plus whatever other benefits you might be getting. $120K salary at a regular job > $120K in paid invoices from clients. If you're a consultant or contractor or whatever, even if you work 8 hours a day they are not all billable hours. There's the tedious business work to look after (record keeping, business development, etc.)