*This calculation accounts for your business expenses and taxes to ensure you hit your net income goal.
function calculateFreelanceRate() {
// 1. Get Values
var desiredIncome = parseFloat(document.getElementById('desiredIncome').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var billableHours = parseFloat(document.getElementById('billableHours').value);
var vacationWeeks = parseFloat(document.getElementById('vacationWeeks').value);
// 2. Validate Inputs
if (isNaN(desiredIncome) || desiredIncome <= 0) {
alert("Please enter a valid Desired Annual Income.");
return;
}
if (isNaN(monthlyExpenses)) monthlyExpenses = 0;
if (isNaN(taxRate)) taxRate = 0;
if (isNaN(billableHours) || billableHours = 1) {
taxDecimal = 0.99;
}
var grossRevenueNeeded = (desiredIncome + annualExpenses) / (1 – taxDecimal);
var hourlyRate = grossRevenueNeeded / totalBillableHours;
// 4. Update UI
document.getElementById('resultsArea').style.display = 'block';
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('hourlyRateResult').innerHTML = formatter.format(hourlyRate);
document.getElementById('grossRevenueResult').innerHTML = formatter.format(grossRevenueNeeded);
document.getElementById('totalHoursResult').innerHTML = totalBillableHours.toFixed(0);
}
Understanding 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 take-home pay, but also your business overhead, taxes, and uncompensated time off. This calculator uses a "bottom-up" approach to determine exactly what you need to charge to maintain your desired lifestyle.
The Hidden Costs of Freelancing
Many new freelancers make the mistake of simply dividing their previous annual salary by 2,080 (the standard number of work hours in a year). This calculation is flawed because it ignores three critical factors:
Billable vs. Non-Billable Hours: You cannot bill clients for 40 hours a week. Administrative tasks, marketing, invoicing, and professional development are unpaid. Most successful freelancers aim for 20-30 billable hours per week.
Self-Employment Taxes: As a freelancer, you are responsible for the full burden of Social Security and Medicare taxes, plus income tax. This often totals 25-30% or more of your gross revenue.
Overhead Expenses: You must fund your own health insurance, software subscriptions, internet, hardware, and office space.
How to Use This Calculator
To get the most accurate result, follow these steps:
Desired Annual Net Income: Enter the amount of money you want to put in your pocket after taxes and expenses. This is your "salary."
Monthly Business Expenses: Sum up your subscriptions, co-working fees, and insurance premiums.
Billable Hours: Be realistic. If you work 40 hours total, you likely only have 25-30 hours available for client work.
Weeks Off: Don't forget to account for holidays, sick days, and vacation time. If you don't plan for them financially, you won't be able to take them.
Interpreting Your Results
The Gross Annual Revenue Goal is the total amount you need to invoice clients this year. The Minimum Hourly Rate is the floor you should set for your pricing. If the rate seems high compared to a salaried equivalent, remember: you are running a business, not just earning a wage. Clients pay a premium for the flexibility and specialized skills you provide without the overhead of hiring a full-time employee.