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The "52 Weeks" Default Assumption
Most simple calculators assume there are 52 weeks in a year. While chronologically true, this assumes you are paid for every single week of the year.
Is that true for you?
- Salaried Employees: Yes, you usually get paid vacations and holidays.
- Hourly Contractors: No. If you don't work, you don't get pay.
The Contractor's Reality: 48-50 Weeks
If you are an hourly contractor, you must account for unpaid time. A safe "billable year" is actually 48 to 50 weeks.
- 2 Weeks Vacation: (Unpaid)
- 5 Sick Days: (Unpaid - approx 1 week)
- 10 Federal Holidays: (Unpaid - approx 2 weeks)
If you take all standard holidays and 2 weeks of vacation, you are only working (and getting paid for) 47-48 weeks.
The Budget Gap
Calculating $50/hour x 40 hours x 52 weeks = $104,000.
Actual: $50/hour x 40 hours x 48 weeks = $96,000.
That is an $8,000 shortfall if you plan based on 52 weeks.
How to Plan Your Rate
If you need to make $100,000 a year, don't divide by 2,080 hours (52 weeks). Divide by 1,920 hours (48 weeks). This naturally "bakes in" your vacation pay into your hourly rate.
Conclusion
Be honest about your time off. It feels great to assume 52 weeks of income, but your bank account prefers the honesty of a 48-week calculation.