How to Price Yourself In Healthcare IT Contracting

Today’s topic is something I get asked quite often. When I speak to people who are working at a hospital and are thinking about getting into contracting one of the common questions I get asked is how do you price yourself in terms of the hourly rate you should be earning?

I am not sure if I can tell anyone what they “should” be earning, but what I can do is give everyone a way to get to a starting point to make a good financial decision.

As a contractor you are paid on an hourly basis.  So, the first thing you want to do is calculate your total compensation an hourly basis.

To do this, first figure out your total compensation of your current position. This includes your salary, bonuses, and any retirement contribution your current employer makes.  If the organization offering a contract does not offer benefits, then you also need to calculate the total cost of purchasing benefits on your own.  This could include, medical, dental, vision, disability, etc.

Again, you are not calculating what you pay for these benefits at your current job; you are calculating what you would pay to get them on your own.  Now, take your total compensation and cost of purchasing benefits to get total replacement income.  In order to convert this to an hourly rate, divide the number by the 2080 hours (40hrs/week times 52 week/year).

Now, as a contractor, you are only going to get paid for the hours you actually work. You will not get paid for holidays, time you take off, or the time you don’t work in between contracts.  You don’t have to be concerned about this “if” you understand the numbers and price yourself correctly.

If you are working in an area where you are offering true expertise, you should be very safe estimating that you will be working 42 weeks a year (thus estimating that you will have 10 weeks where you are receiving $0 compensation).  So 42 weeks X 40 hours a week is 1680 hours.  Divide your replacement total income by 1680 hours and you will have the hourly rate that if you worked only 42 weeks a year would equally replace the total income and benefits you have been receiving at your currently employer.

So, there are three ways to accept a contract and make sure your increase your compensation:

1.Work 40hrs/week for 42 weeks a year with a HIGHER hourly rate than the one you just calculated.

2.Get the hourly rate you just calculated while working 40hrs/week for more than 42 weeks a year.

3.Get the hourly rate you just calculated while only working 42 weeks a year but working more than 40 hours a week.

However, if two or all three of the variables above increase from what we have calculated and you will find in most cases your income will increase by 25% to 40%.

About the author


David Kushan

David Kushan is the President of Healthcare IS and has spent the last 18 years of his career working in the Healthcare Information Technology industry assisting over 120 healthcare organizations nationwide. Visit for Dave’s company blog, articles, podcasts and more.


  • Hi Rhonda,

    I am glad you felt the post was helpfull. You can check our website for other similar articles or contact me directly.

    Have a good weekend!

  • David, what this fails to take into account is the ‘going rate’ for contract positions, especially in IT and marketing. I’ve seen rates into the $30/hour range for both because outside factors have depressed rates due to foreign outsourcing, use of multiple recruiters/sub-contractors, high unemployment etc. Analytics seems to be fairly immune to this, but strategic sourcing is beginning to be depressed. So your hospital-based future consultants need to take a look at rates before making a hopeful jump.

    Easy rule on your calculation is that benefits are 30% of your base compensation.

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