Freelance Hourly Rate Calculator
The amount you want to take home after taxes and expenses.
Software, hardware, insurance, co-working space, etc.
Hours you actually charge clients (exclude admin/marketing time).
Vacation, sick days, and holidays.
Combined income and self-employment tax rate.
Minimum Hourly Rate:
$0.00
Gross Revenue Needed:
$0.00
Total Billable Hours/Year:
0
Daily Target (8h day):
$0.00
How to Calculate Your Freelance Hourly Rate
Determining the right hourly rate is one of the most challenging aspects of freelancing. Unlike a salaried employee, your rate must cover not just your desired income, but also your business overhead, taxes, and unbillable time. This calculator helps you work backward from your financial goals to find the minimum rate you must charge to sustain your lifestyle.
Understanding the Key Variables
To use this calculator effectively, it is important to understand the components that make up your rate:
- Target Annual Net Income: This is your "take-home" pay. It's the money used for personal rent/mortgage, groceries, and savings. Do not include business costs here.
- Business Expenses: Freelancers must pay for their own equipment, software subscriptions, health insurance, liability insurance, and marketing. These "overhead" costs must be earned on top of your salary.
- Billable Hours: You might work 40 hours a week, but you likely only bill for 20-30. The rest is spent on admin, finding clients, and professional development. Your billable hours must subsidize this non-billable time.
- Weeks Off: Freelancers do not get paid time off. You must earn enough in your working weeks to cover vacations, sick days, and public holidays.
The Math Behind the Calculation
The formula used in this calculator accounts for taxes on your profit, ensuring your net income goal is actually met.
Gross Revenue Needed = (Target Net Income / (1 – Tax Rate)) + Expenses
Once we have the total gross revenue required for the year, we divide it by your total available billable hours (Working Weeks × Billable Hours/Week) to determine your minimum hourly rate.
Example Calculation
Let's say you want to take home $60,000 a year. You have $10,000 in business expenses, want 4 weeks off, and plan to bill 25 hours a week. Assuming a 25% tax rate:
- Working Weeks: 52 – 4 = 48 weeks
- Total Billable Hours: 48 weeks × 25 hours = 1,200 hours
- Pre-Tax Income Needed: $60,000 / (1 – 0.25) = $80,000
- Gross Revenue Needed: $80,000 (Income) + $10,000 (Expenses) = $90,000
- Hourly Rate: $90,000 / 1,200 hours = $75.00/hour
By charging $75/hour, you cover your costs, pay your taxes, and hit your $60,000 net income goal.