Current Mortgage Rates San Diego Calculator

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Freelance Hourly Rate Calculator

Determine exactly what you need to charge to meet your lifestyle and business goals.

Take-home pay you want after taxes.
Software, hosting, equipment, office rent.
Hours actually spent working for clients.
Vacation, holidays, and sick days.
Combined income and self-employment tax.
Buffer for savings or business growth.
Minimum Hourly Rate $0.00
Gross Annual Revenue Needed $0.00
Total Billable Hours / Year 0
Estimated Taxes $0.00
function calculateFreelanceRate() { // 1. Get Input Values var targetIncome = parseFloat(document.getElementById('target_income').value); var expenses = parseFloat(document.getElementById('annual_expenses').value); var hoursPerWeek = parseFloat(document.getElementById('billable_hours_per_week').value); var weeksOff = parseFloat(document.getElementById('weeks_off').value); var taxRate = parseFloat(document.getElementById('tax_rate').value); var profitMargin = parseFloat(document.getElementById('profit_margin').value); // 2. Validate Inputs if (isNaN(targetIncome) || isNaN(expenses) || isNaN(hoursPerWeek) || isNaN(weeksOff) || isNaN(taxRate)) { alert("Please fill in all required fields with valid numbers."); return; } // Set defaults for optional logic if needed, but validation handles most if (isNaN(profitMargin)) profitMargin = 0; // 3. Calculation Logic // Calculate Total Working Weeks var workingWeeks = 52 – weeksOff; // Calculate Total Billable Hours per Year var totalBillableHours = workingWeeks * hoursPerWeek; // Prevent division by zero if (totalBillableHours = 1) { alert("Tax rate cannot be 100% or higher."); return; } var grossRevenue = goalWithProfit / (1 – decimalTax); var totalTaxes = grossRevenue * decimalTax; // Calculate Hourly Rate var hourlyRate = grossRevenue / totalBillableHours; // 4. Update UI var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 2 }); document.getElementById('display_hourly_rate').innerHTML = formatter.format(hourlyRate); document.getElementById('display_gross_revenue').innerHTML = formatter.format(grossRevenue); document.getElementById('display_total_hours').innerHTML = Math.round(totalBillableHours).toLocaleString(); document.getElementById('display_taxes').innerHTML = formatter.format(totalTaxes); // Show results container document.getElementById('results').className = "results-area active"; }

How to Calculate Your Freelance Hourly Rate Accurately

One of the most challenging aspects of transitioning from full-time employment to freelancing is determining your pricing strategy. Unlike a salaried employee, a freelancer must cover their own overhead, taxes, insurance, and unpaid downtime. Simply dividing your previous salary by 2,080 (the standard number of work hours in a year) is a recipe for financial struggle.

This Freelance Hourly Rate Calculator uses a "reverse engineering" approach to help you set a rate that covers your costs and hits your income targets.

1. Understanding Billable vs. Non-Billable Hours

A common mistake new freelancers make is assuming they can bill for 40 hours a week. In reality, you will spend a significant portion of your time on non-billable tasks, including:

  • Marketing and business development (finding clients)
  • Administrative work (invoicing, contracts)
  • Skill development and training
  • IT troubleshooting

Most successful freelancers average between 20 to 30 billable hours per week. If you calculate your rate based on a 40-hour billable week, you will likely fall short of your income goals.

2. The Tax Burden

As an employee, your employer pays half of your Social Security and Medicare taxes. As a freelancer, you are responsible for the full amount (often referred to as Self-Employment Tax) plus your standard income tax. This calculator factors in your estimated tax rate to ensure your gross revenue is high enough to leave you with your desired net income.

Pro Tip: A safe rule of thumb for US-based freelancers is to set aside 25-30% of every payment for taxes.

3. Calculating Overhead and Expenses

Gross revenue is vanity; net profit is sanity. Your hourly rate must cover every expense your employer used to pay for. This includes:

  • Hardware & Software: Laptops, Adobe Creative Cloud, accounting software, hosting.
  • Office Costs: Coworking space fees, internet, utilities, ergonomic furniture.
  • Professional Fees: Legal advice, accountant fees, business insurance.
  • Health Insurance: Premiums and out-of-pocket costs.

4. Why Factor in a Profit Margin?

You shouldn't just break even. Your business needs to generate profit to:

  • Build a rainy day fund for lean months.
  • Invest in better equipment or courses.
  • Allow for eventual outsourcing of tasks.

Adding a 10-20% profit margin on top of your base costs ensures your business is sustainable and scalable.

Example Calculation

Let's say you want to take home $60,000 a year. You have $5,000 in expenses, want 4 weeks of vacation, and can bill 25 hours a week. Assuming a 30% tax rate:

  1. Working Weeks: 52 – 4 = 48 weeks.
  2. Billable Hours: 48 weeks × 25 hours = 1,200 hours/year.
  3. Total Cash Needed (Pre-Tax): To net $65,000 (income + expenses) after 30% taxes, you need roughly $92,857 in gross revenue.
  4. Hourly Rate: $92,857 / 1,200 hours = $77.38/hour.

Using the calculator above removes the guesswork and does this math instantly for your specific situation.

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