An hourly rate is the amount required for one hour of work.
How to Calculate an Hourly Rate?
To calculate an hourly rate, the amount of current expenditure must first be calculated, i.e. company costs, personal expenses (transport, training, membership of a professional order), the desired salary, and expected income tax. This amount is then divided by the billable hours per year to obtain an hourly rate.
For example, current expenditure for an independent worker is around $90,000 per year. They estimate working 32 billable hours per week for 47 weeks, giving a total of 1,504 hours per year. Their hourly rate is, therefore, $59.85 (90,000 ÷ 1,504 = 59.85).
The hourly rate is sometimes confused with the hourly wage, which is the amount received by an individual for an hour of work. Therefore, someone who receives a salary of $50,000 per year and works 35 hours per week on average, is paid an hourly wage of $27.47.