Determine what you need to charge to meet your income goals.
Gross Annual Revenue Needed:$0.00
Total Billable Hours / Year:0
Minimum Hourly Rate:$0.00
Understanding Your Freelance Hourly Rate
Setting the correct hourly rate is one of the most critical challenges for freelancers, consultants, and independent contractors. Unlike a salaried employee, your rate must cover not just your take-home pay, but also your taxes, business expenses, insurance, and unpaid time off. This Freelance Hourly Rate Calculator uses a reverse-engineering approach to determine exactly what you need to charge to maintain your desired standard of living.
How the Calculation Works
Many freelancers make the mistake of simply dividing their desired salary by 2,080 (the standard number of work hours in a year). This formula leads to undercharging because it ignores the non-billable realities of running a business. Our calculator uses the following logic:
Net Income Goal: The actual money you want to put in your pocket after all costs.
Overhead Factor: We add your annual business expenses (software, hardware, co-working space, marketing) to your net goal.
Tax Burden: We adjust the total to account for self-employment taxes and income tax, ensuring your net goal is actually net.
Billable Capacity: We calculate your actual working hours by subtracting vacation time, sick days, and holidays from the calendar year.
Why "Billable Hours" Matter
It is rarely possible to bill 40 hours a week. A significant portion of your week will be spent on administration, invoicing, finding new clients, and professional development. A healthy freelance practice often averages 20-30 billable hours per week. If you calculate your rate based on a 40-hour week, you will likely fall short of your income targets.
Strategies to Increase Your Rate
If the result from the calculator is higher than your current market rate, consider these strategies to close the gap:
Specialize: Generalists compete on price; specialists compete on value. Niche down to command higher fees.
Value-Based Pricing: Move away from hourly billing towards project-based or value-based pricing where you charge for the solution, not the time.
Reduce Overhead: Audit your monthly subscriptions and expenses to lower the gross revenue needed to hit your net goals.
function calculateRate() {
// 1. Get input values
var targetIncome = document.getElementById('targetIncome').value;
var monthlyExpenses = document.getElementById('monthlyExpenses').value;
var taxRate = document.getElementById('taxRate').value;
var billableHours = document.getElementById('billableHours').value;
var weeksOff = document.getElementById('weeksOff').value;
var errorDisplay = document.getElementById('errorDisplay');
var resultsArea = document.getElementById('results-area');
// 2. Parse values to floats
var income = parseFloat(targetIncome);
var expenses = parseFloat(monthlyExpenses);
var tax = parseFloat(taxRate);
var hours = parseFloat(billableHours);
var vacation = parseFloat(weeksOff);
// 3. Validation
if (isNaN(income) || isNaN(expenses) || isNaN(tax) || isNaN(hours) || isNaN(vacation)) {
errorDisplay.style.display = "block";
errorDisplay.innerText = "Please fill in all fields with valid numbers.";
resultsArea.style.display = "none";
return;
}
if (hours <= 0) {
errorDisplay.style.display = "block";
errorDisplay.innerText = "Billable hours must be greater than 0.";
resultsArea.style.display = "none";
return;
}
if (vacation 52) {
errorDisplay.style.display = "block";
errorDisplay.innerText = "Weeks off must be between 0 and 52.";
resultsArea.style.display = "none";
return;
}
errorDisplay.style.display = "none";
// 4. Calculation Logic
// Annual Expenses
var annualExpenses = expenses * 12;
// Total money needed before tax to cover net income + expenses
// Formula derivation:
// GrossRevenue – (GrossRevenue * TaxRate) = TargetIncome + AnnualExpenses
// GrossRevenue * (1 – TaxRate) = TargetIncome + AnnualExpenses
// GrossRevenue = (TargetIncome + AnnualExpenses) / (1 – TaxRate)
var taxDecimal = tax / 100;
// Prevent division by zero or negative if tax is 100% or more
if (taxDecimal >= 1) {
errorDisplay.style.display = "block";
errorDisplay.innerText = "Tax rate must be less than 100%.";
resultsArea.style.display = "none";
return;
}
var grossRevenue = (income + annualExpenses) / (1 – taxDecimal);
// Calculate Total Billable Hours per Year
// Total weeks available = 52 – weeksOff
var weeksWorking = 52 – vacation;
var totalBillableHours = weeksWorking * hours;
if (totalBillableHours <= 0) {
errorDisplay.style.display = "block";
errorDisplay.innerText = "Total billable hours result in 0 or less. Reduce weeks off or increase weekly hours.";
resultsArea.style.display = "none";
return;
}
var hourlyRate = grossRevenue / totalBillableHours;
// 5. Display Results
document.getElementById('grossRevenueResult').innerText = "$" + grossRevenue.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalHoursResult').innerText = totalBillableHours.toLocaleString('en-US');
document.getElementById('hourlyRateResult').innerText = "$" + hourlyRate.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
resultsArea.style.display = "block";
}