Freelance Hourly Rate Calculator
Determine what you need to charge per hour to reach your financial goals.
How to Calculate Your Freelance Hourly Rate
Setting your freelance rate is one of the most critical decisions for your business. Many new freelancers make the mistake of simply matching what they earned as employees, forgetting that as a freelancer, you are responsible for your own taxes, equipment, software, insurance, and unpaid time off.
To calculate a sustainable rate, you must work backward from your lifestyle goals. This calculator uses the following logic:
- Total Gross Revenue: The sum of your desired net take-home pay, your business overhead, and the taxes you owe to the government.
- Billable Hours: Not every hour you work is billable. Administrative tasks, marketing, and prospecting are non-billable. Most full-time freelancers find that 20–30 billable hours per week is a realistic peak.
- The Formula: (Annual Salary + Expenses + Taxes) / (Weeks worked × Billable hours per week).
Example Calculation
If you want to take home $70,000 annually, have $5,000 in software/hardware costs, and expect a 25% tax rate, your total gross revenue target is approximately $100,000. If you work 48 weeks a year (allowing 4 weeks for vacation/sick time) at 25 billable hours per week, your rate would be:
$100,000 / (48 * 25) = $83.33 per hour.
Key Factors to Consider
Value-Based Pricing: While hourly rates provide a safety net, consider transitioning to value-based or project-based pricing as you gain experience. This allows you to earn more as you become more efficient.
Overhead: Don't forget to include health insurance premiums, retirement contributions (like a SEP IRA), and specialized software subscriptions in your annual expenses.