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//// Business · Freelance Growth

Raise Rates or Hire Calculator

The decision most contractors get wrong: raise rates or hire a sub? Compare revenue per hour of your time for both paths — with sub margin analysis, capacity utilization, and a recommendation based on your actual numbers.

Where this fits

💼 Income & OffersGoing 1099FreelancersEmployees

This tool lives inside Going 1099 and is most useful for freelancers and employees.

Corp Tax Rate21%
SE Threshold$400
FICA Cap 2024$168,600

Current State

Capacity utilization80%

Option A — Raise Rates

Option B — Hire / Subcontract

Recommendation: Hybrid Approach

You're close to capacity (80%). Consider a hybrid: raise rates on new clients while testing subcontracting on lower-value work. Both paths improve your revenue per hour of personal time.

Current Revenue/Hr
$150.00/hr
80 hrs/mo
Option A Revenue/Hr
$180.00/hr
After rate raise
Option B Revenue/Hr
$168.10/hr
Net / your hours
Sub Margin
50%
On delegated work
Current
$12,000/mo
Your hours80 hrs
Revenue / your hour$150.00/hr
Margin100%
Option A — RaiseBetter
$10,800/mo
Your hours60 hrs
Revenue / your hour$180.00/hr
Margin100%
Option B — Hire
$9,750/mo
Your hours58 hrs
Revenue / your hour$168.10/hr
Sub cost−$2,250
Margin81%

Break-even sub rate: at $40.00/hr for the sub, Option B net revenue equals Option A revenue. Your sub rate is above break-even — raising rates currently wins.

1

Option A — Raise rates revenue

new_rev = billable_hrs × retention% × new_rate

80 hrs × 75% × $180.00/hr

= $10,800/mo

You work 60 hrs at $180.00/hr effective.

2

Option B — Hire: net revenue

net_rev = (all_hrs × rate) − sub_cost

(80 × $150.00) − (30 × $75.00)

= $9,750/mo

3

Option B — Revenue per your hour

rev_per_hr = net_rev / (direct_hrs + mgmt_overhead)

$9,750 / (50 + 8) hrs

= $168.10/hr

4

Sub margin on delegated work

margin = (your_rate − sub_rate) / your_rate × 100

($150.00 − $75.00) / $150.00

= 50%

30%+ margin justifies hiring. Below 30%, raise rates first.

Key insight

Revenue per hour of YOUR time is the key metric — not total gross revenue. A solo contractor billing $15k at 80 hrs/mo ($187/hr) beats a contractor billing $20k but managing a sub for 50 hrs + 20 mgmt hrs ($286/hr net, but only if sub margin holds). The breakeven analysis tells you exactly when hiring pays off. Most contractors should raise rates 1–2 times before considering subcontracting.

Use this result in →

Pricing Strategy →Overhead Rate →Subcontractor vs Employee →

#ShowYourWork

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