Setting your rates as a freelancer is one of the most challenging aspects of running your own business. If you charge too little, you risk burnout and financial strain. If you charge too much without the experience to back it up, you might struggle to land clients.
This calculator helps you determine a sustainable hourly rate based on your desired take-home pay, business expenses, anticipated taxes, and realistic working capacity. It accounts for the crucial difference between "billable hours" and actual hours worked.
Your take-home pay goal *after* taxes and expenses.
Software, hardware, insurance, coworking, etc.
Combined self-employment and income tax estimate.
Realistic hours actually billed to clients (not admin time).
Vacation, sick days, and holidays.
Your Recommended Hourly Rate
$0.00
Required Annual Gross Revenue: $0.00
Based on 0 total billable hours per year.
function calculateFreelanceRate() {
// 1. Get input values
var netIncomeInput = document.getElementById("fhr-net-income").value;
var expensesInput = document.getElementById("fhr-expenses").value;
var taxRateInput = document.getElementById("fhr-tax-rate").value;
var billableHoursInput = document.getElementById("fhr-billable-hours").value;
var weeksOffInput = document.getElementById("fhr-weeks-off").value;
// 2. Parse values to numbers
var netIncome = parseFloat(netIncomeInput);
var expenses = parseFloat(expensesInput) || 0; // Default to 0 if empty
var taxRatePercent = parseFloat(taxRateInput);
var billableHoursWeekly = parseFloat(billableHoursInput);
var weeksOff = parseFloat(weeksOffInput) || 0; // Default to 0 if empty
// 3. Validate inputs
if (isNaN(netIncome) || netIncome < 0 || isNaN(taxRatePercent) || taxRatePercent = 100 || isNaN(billableHoursWeekly) || billableHoursWeekly <= 0 || isNaN(weeksOff) || weeksOff = 52) {
alert("Please enter valid positive numbers. Tax rate must be between 0 and 100, billable hours must be greater than 0, and weeks off must be less than 52.");
document.getElementById("fhr-result-container").style.display = "none";
return;
}
// 4. Logic Calculation
// Calculate total working weeks
var workingWeeks = 52 – weeksOff;
// Calculate total annual billable hours
var totalAnnualHours = billableHoursWeekly * workingWeeks;
// Calculate required gross revenue.
// Formula: Gross = (Net Goal / (1 – TaxRateDecimal)) + Expenses
// This ensures taxes are calculated on the profit (Gross – Expenses) to achieve the Net Goal.
var taxRateDecimal = taxRatePercent / 100;
var requiredGross = (netIncome / (1 – taxRateDecimal)) + expenses;
// Calculate hourly rate
var hourlyRate = requiredGross / totalAnnualHours;
// Handle potential division by zero edge case if total hours calculated to 0 somehow
if (!isFinite(hourlyRate)) {
alert("Result is infinite. Please check your input values, especially billable hours and weeks off.");
return;
}
// 5. Display Result
document.getElementById("fhr-final-rate").innerHTML = "$" + hourlyRate.toFixed(2);
document.getElementById("fhr-required-gross").innerHTML = "$" + requiredGross.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,'); // Add commas for readability
document.getElementById("fhr-total-hours").innerHTML = totalAnnualHours.toFixed(0);
document.getElementById("fhr-result-container").style.display = "block";
}
Understanding the Freelance Formula
Why can't you just take your desired salary and divide it by 2,080 (the standard number of working hours in a year)? Because as a freelancer, you are the employer and the employee. You bear costs that a traditional employer usually covers.
Non-Billable Time: You cannot bill clients for marketing, accounting, drafting proposals, or answering emails. A typical freelancer might only be "billable" for 50-75% of their working week. This calculator uses your "Billable Hours per Week" to account for this.
Taxes (Self-Employment): You are responsible for both the employer and employee portions of certain taxes (like Social Security and Medicare in the US), plus your standard income tax. This is significantly higher than W-2 employee withholding.
Business Expenses: You must cover your own equipment, software subscriptions, internet, and professional fees.
Unpaid Time Off: Freelancers do not get paid vacations or sick leave. You must factor this downtime into your hourly rate to maintain your desired annual income.
For example, if you want a net income of $50,000, have $5,000 in expenses, estimate a 25% tax rate, plan to take 4 weeks off, and can realistically bill 30 hours per week, your required gross revenue is nearly $71,666, and your hourly rate needs to be approximately $50.00 per hour just to meet that baseline goal.