What is the Hourly to Annual Salary?
Converting an hourly rate into annual income is simple multiplication, but the two variables people get wrong are working weeks and unpaid time. A salaried employee is paid for 52 weeks including holidays; a contractor billing 40 hours is usually paid for 46–48 weeks at best.
That gap is why a contract rate must be meaningfully higher than the salaried equivalent to be worth taking.
Formula & worked example
Multiply up, then subtract unpaid time:
Monthly = Annual / 12
Worked example: ₹800 an hour, 40 hours a week, 48 working weeks → 800 × 40 × 48 = ₹15,36,000 a year, or ₹1,28,000 a month. A salaried role paying the same ₹15.36 lakh also includes paid leave, PF, gratuity and insurance — so the contract rate needs to be roughly 25–30% higher to match it.
How to use this hourly to annual salary calculator
- Enter your hourly rate.
- Set realistic hours per week — billable hours, not hours worked.
- Use 46–48 working weeks for contractors to account for holidays and gaps.
- Add any unpaid leave days you expect to take.
Smart tips
- Contractors should add 25–30% over a salaried rate to cover leave, PF, gratuity, insurance and gaps between contracts.
- Bill in blocks, not by the minute. Rounding to the nearest 30 minutes typically recovers 5–8% of lost time.
- Track billable versus worked hours. Most freelancers bill only 60–70% of the hours they actually work.
- Review your rate annually. Freelance rates that never rise are a real pay cut every year.
Frequently asked questions
How do I convert an hourly rate to annual salary?
Multiply the hourly rate by hours per week, then by working weeks per year. For a full-time equivalent, 40 hours × 52 weeks = 2,080 hours.
How many working weeks are in a year?
52 calendar weeks, but 46–48 is realistic for contractors after holidays, sick days and gaps between engagements.
Should a contractor charge more than a salaried rate?
Yes, typically 25–30% more, to cover paid leave, PF, gratuity, health insurance and periods without work that a salary covers automatically.
How do I set my freelance hourly rate?
Start from the annual income you need, divide by realistic billable hours (roughly 1,200–1,400 a year), then add a margin for taxes and business costs.
Want the theory behind the numbers? Read our freelance guides on the Money Blog.