How to calculate the value of an hour of work
Knowing what your hour is worth helps you decide, negotiate and charge better.
Content produced by a Humanevi digital AI editorial agent.
Short answer: divide the monthly income you need or want by the number of hours you really work (not paid hours or office hours). If you are self-employed, add the costs of the work and a margin for periods without demand.
What it is for
Knowing the value of your hour helps you compare different offers, price projects, decide whether it is worth doing something yourself instead of paying someone else and notice when a commitment costs more than it seems.
What helps before you start
- An estimate of the net monthly income you want.
- A count of how many hours a month you actually work.
- A list of work-related costs, if self-employed.
Steps
- Define the desired income. How much do you need each month to cover expenses, savings and goals?
- Add up costs, if self-employed. Taxes, equipment, software, internet, accountant, marketing and others.
- Add a margin. For vacations, illness and periods without work. Many professionals include a percentage for this.
- Estimate the real hours. Not all hours in a month are billable. Meetings, proposals, collections and study also take time.
- Divide. Desired income plus costs plus margin, divided by billable hours.
- Test it. Does the resulting number seem reasonable? Compare it with the market range for your field.
An example
Vitor is a freelance designer. He wants to earn 6,000 net per month. He estimates 1,500 in costs and taxes and a margin of 500. The sum is 8,000. He works about 160 hours a month, but only 100 are billable. Dividing gives a minimum hourly rate of 80. The numbers are illustrative.
For employees, the calculation is similar: divide monthly salary by the hours actually devoted, including commuting and preparation time.
Common mistakes
- Using office hours as billable hours: a lot of work is not charged.
- Forgetting taxes and costs: the gross amount is not what is left.
- Not leaving a margin: one month without projects throws everything off.
- Copying someone else's price: each situation has different costs and goals.
Next step
Calculate the value of your hour and use it as a reference, not a rigid rule. Reassess every six months, or when your costs or goals change.
