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Freelance Hourly Rate Calculator

Determine the hourly rate you need to charge to meet your income goals, cover expenses, and account for taxes and non-billable time.

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function calculateFreelanceRate() { // 1. Retrieve Inputs using var var desiredNetIncomeInput = document.getElementById('desiredNetIncome').value; var annualExpensesInput = document.getElementById('annualExpenses').value; var estimatedTaxRateInput = document.getElementById('estimatedTaxRate').value; var weeksWorkedPerYearInput = document.getElementById('weeksWorkedPerYear').value; var billableHoursPerWeekInput = document.getElementById('billableHoursPerWeek').value; var resultDiv = document.getElementById('rateResult'); // 2. Parse values and handle edge cases/NaN var desiredNetIncome = parseFloat(desiredNetIncomeInput) || 0; var annualExpenses = parseFloat(annualExpensesInput) || 0; var estimatedTaxRate = parseFloat(estimatedTaxRateInput) || 0; var weeksWorkedPerYear = parseFloat(weeksWorkedPerYearInput) || 0; var billableHoursPerWeek = parseFloat(billableHoursPerWeekInput) || 0; // Ensure no negative values where inappropriate if (desiredNetIncome < 0) desiredNetIncome = 0; if (annualExpenses < 0) annualExpenses = 0; if (estimatedTaxRate < 0) estimatedTaxRate = 0; //Validation to prevent division by zero if (weeksWorkedPerYear 52) { resultDiv.style.display = 'block'; resultDiv.innerHTML = "Please enter a valid number of weeks worked per year (1-52)."; resultDiv.style.backgroundColor = "#f8d7da"; resultDiv.style.borderColor = "#f5c6cb"; resultDiv.style.color = "#721c24″; return; } if (billableHoursPerWeek 0)."; resultDiv.style.backgroundColor = "#f8d7da"; resultDiv.style.borderColor = "#f5c6cb"; resultDiv.style.color = "#721c24"; return; } // 3. The Calculation Logic // Calculate total cash needed before taxes to cover net income + expenses var totalNeededPostTax = desiredNetIncome + annualExpenses; // Calculate tax multiplier. If tax rate is 25%, you keep 75% (0.75). // Gross = Net / (1 – taxRate) var taxDecimal = estimatedTaxRate / 100; var keepRate = 1 – taxDecimal; // Safety check if tax rate is 100% or more if (keepRate <= 0) { resultDiv.style.display = 'block'; resultDiv.innerHTML = "Tax rate must be less than 100%."; resultDiv.style.backgroundColor = "#f8d7da"; resultDiv.style.borderColor = "#f5c6cb"; resultDiv.style.color = "#721c24"; return; } var grossAnnualRevenueNeeded = totalNeededPostTax / keepRate; // Calculate total billable hours available in the year var totalBillableHours = weeksWorkedPerYear * billableHoursPerWeek; // Calculate final hourly rate var requiredHourlyRate = grossAnnualRevenueNeeded / totalBillableHours; // 4. Display Result resultDiv.style.display = 'block'; resultDiv.style.backgroundColor = "#dff0d8"; resultDiv.style.borderColor = "#d0e9c6"; resultDiv.style.color = "#3c763d"; resultDiv.innerHTML = "To achieve your goal, your required minimum hourly rate is: $" + requiredHourlyRate.toFixed(2) + " / hour.To net $" + desiredNetIncome.toLocaleString() + " after est. expenses of $" + annualExpenses.toLocaleString() + ", you need to gross approximately $" + grossAnnualRevenueNeeded.toFixed(2).toLocaleString() + " annually based on a " + estimatedTaxRate + "% tax rate."; }

Why Your Freelance Hourly Rate Calculation Matters

One of the biggest challenges for new freelancers and consultants is determining pricing. Unlike a traditional salary, your freelance hourly rate isn't just money in your pocket; it must sustain an entire business structure. If you simply take your previous salary and divide it by 2,080 (the standard working hours in a year), you will likely drastically undercharge and run into financial difficulties.

This Freelance Hourly Rate Calculator is designed to help you reverse-engineer your pricing based on your actual financial needs, rather than guesswork or arbitrary market averages.

Understanding the Key Factors in Your Rate

Setting a sustainable rate requires understanding the difference between "working hours" and "billable hours," as well as the impact of self-employment taxes and overhead.

• Net Income vs. Gross Revenue: The calculator starts with what you actually want to take home (Net Income). Your business must generate significantly more than this (Gross Revenue) to cover the costs of running that business.
• The "Billable Hours" Trap: A full-time employee works roughly 40 hours a week. A freelancer also works 40+ hours a week, but they cannot bill clients for all of that time. You spend time on marketing, accounting, drafting proposals, and education. A realistic freelancer often only bills between 20 and 30 hours per week. If you assume you will bill 40 hours, your calculated rate will be too low to sustain you.
• The Tax Burden: As an employee, your employer pays half of your FICA taxes (Social Security and Medicare). As a freelancer, you pay both halves (self-employment tax), in addition to standard federal and state income taxes. This often amounts to 25% to 35% of your gross income.
• Business Overhead: You are now responsible for costs your employer used to cover: health insurance, software subscriptions (Adobe Creative Cloud, QuickBooks, etc.), hardware upgrades, internet costs, and coworking space fees.

Example Calculation Scenario

Let's look at a realistic scenario for a freelance graphic designer using this calculator to determine their minimum viable rate.

• Goal: They want a lifestyle equivalent to a $60,000 salary (Desired Net Income: $60,000).
• Expenses: They spend about $400/month on software, hosting, and insurance (Annual Business Expenses: $4,800).
• Taxes: They estimate their combined self-employment and income tax bracket is roughly 30% (Estimated Tax Rate: 30%).
• Time Off: They plan to take 2 weeks of vacation, 1 week for holidays, and 1 week for sick time (Weeks Worked Per Year: 48).
• Productivity: They know that for every hour they bill, they spend an hour on admin work (Billable Hours Per Week: 20).

According to the calculator logic, to net $60,000 and cover $4,800 in expenses, they need to generate $64,800 *after* taxes. To achieve this with a 30% tax rate, they must gross roughly $92,571 annually. Divided by their total available billable hours (48 weeks * 20 hours = 960 hours), their minimum hourly rate must be approximately $96.43 per hour.

Use the tool above to plug in your own numbers and find your baseline rate.