Calculate your total business operating costs, minimum hourly rate, break-even revenue, and profit margin. Includes cost breakdown visualization and revenue scenarios.
The cost of doing business is the total annual expense required to keep your business running — from fixed overhead like rent and insurance to variable costs, owner compensation, debt service, taxes, and marketing. Understanding this number is critical because it tells you exactly how much revenue you must generate just to break even, and what hourly rate you need to charge to sustain operations.
Many small business owners focus on revenue without fully accounting for all costs, leading to underpicing, cash flow problems, and ultimately failure. For service businesses and freelancers, knowing your true cost of doing business per hour is essential for setting rates that actually cover expenses and leave room for profit. A freelancer with $80,000 in annual costs and 1,600 billable hours needs to charge at least $50/hour just to break even — before any profit.
This calculator aggregates all your business costs into a single view, breaks them down by category, and computes your minimum viable revenue, hourly rate, and daily cost of operations. The revenue scenario table shows how your profitability changes at different revenue levels — essential for growth planning and pricing strategy.
Knowing your exact cost of doing business prevents the #1 small business mistake: underpricing. This calculator turns your scattered expenses into clear metrics — minimum rates, break-even revenue, and daily operating cost — so you can price with confidence. Keep these notes focused on your operational context. Tie the context to the calculator’s intended domain. Use this clarification to avoid ambiguous interpretation.
Total Cost = Fixed + Variable + Owner Salary + Debt + Tax + Insurance + Marketing Monthly Cost = Total ÷ 12 Daily Cost = Total ÷ 365 Hourly Cost = Total ÷ Billable Hours Break-Even Revenue = Total Cost (where profit = 0) Min Hourly Rate = Total Cost ÷ Billable Hours Suggested Rate = Min Rate × 1.30 (includes 30% margin)
Result: Total cost $456,000 — $38,000/month — min $228/hr for 2,000 billable hrs
Costs total $456K/year. You need $38K/month just to stay afloat. At 2,000 billable hours, your cost is $228/hr. To earn a 30% margin, charge at least $296/hr. Revenue of $500K leaves $44K net profit (8.8% margin).
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It's the foundation of pricing strategy. If you don't know your total costs, you can't set profitable prices. Many businesses fail not from lack of revenue but from not understanding their true cost structure, leading to chronic underpricing.
Fixed costs stay the same regardless of sales volume: rent, insurance, salaries, loan payments. Variable costs change with volume: materials, shipping, sales commissions, credit card processing fees. Some costs are semi-variable (utilities, phone).
For solo professionals: 1,200-1,600 hours/year is realistic (60-80% of 40-hour weeks after admin, marketing, vacation). Employees: 1,800-2,000 hours. Always use conservative estimates — overestimating billable hours leads to underpricing.
Absolutely. If you don't pay yourself, your business isn't truly profitable — it's subsidized by your labor. Include market-rate compensation for your role. This is also called "opportunity cost" of your time.
A P&L (income statement) shows actual results. This calculator is forward-looking — it helps you plan by modeling different cost and revenue scenarios. Use actual P&L data from last year as inputs for more accurate projections.
It varies by industry: Retail 90-95%, Services 60-80%, Software/SaaS 40-60%. Generally, total costs below 80% of revenue is healthy for most businesses, leaving 20%+ for profit and reinvestment.