What Is the Cost of Doing Business?
The Cost of Doing Business (CODB) is the minimum amount you must earn each billable day simply to cover your operating expenses — before you make any profit or pay yourself a salary. It is one of the most important numbers a freelancer, photographer, consultant, contractor, or small studio can know. Pricing below your CODB means you lose money on every job, even when you feel busy.
How to Use This Calculator
Enter your total annual expenses — rent, equipment, software, insurance, marketing, taxes, vehicle costs, and the salary you want to draw. Then enter the number of billable days you realistically work in a year. Remember that weekends, holidays, sick days, admin time, and marketing time are not billable, so this number is usually well below 365. The calculator returns your break-even cost per billable day and per billable hour.
The Formula Explained
CODB per billable day = Total Annual Expenses ÷ Number of Billable Days. The hourly figure simply divides the daily number by 8. Any rate you charge must exceed the daily CODB; the amount above it is your profit margin.
$$\text{CDB} = \frac{\text{Annual Expenses}}{\text{Billable Days}}$$
$$\text{CDB}_{\text{hourly}} = \frac{1}{8}\cdot\frac{\text{Annual Expenses}}{\text{Billable Days}}$$
Worked Example
Suppose your annual expenses total $60,000 and you can bill 230 days a year. Your CODB is $$\$60{,}000 \div 230 = \$260.87 \text{ per day}$$ or about $32.61 per billable hour. So a day rate of $400 would yield roughly $139 of profit per day after covering costs.
FAQ
How many billable days should I use? A full-time freelancer often has 220–240 billable days after subtracting weekends, holidays, vacation, and non-billable admin time.
Should I include my own salary in expenses? Yes — include the income you want to earn as an expense so your day rate truly supports your lifestyle.
Is CODB the same as my price? No. CODB is your floor. Your price must be higher to generate profit and absorb risk.
