Freelance Hourly Rate Calculator
Determine exactly what you need to charge to meet your financial goals.
Your Recommended Minimum Hourly Rate:
$0.00
How to Calculate Your Freelance Hourly Rate
Setting your freelance rate is one of the most critical steps in building a sustainable business. Unlike a traditional salary, your hourly rate must cover your personal take-home pay, business overhead, taxes, and non-billable time spent on admin and marketing.
The Hidden Costs of Freelancing
Many new freelancers make the mistake of dividing their old salary by 2,080 (the number of work hours in a year). This leads to burnout and financial struggle because it ignores three key factors:
- The Tax Gap: You are responsible for both the employer and employee portions of social security and medicare, plus state and federal income tax.
- Non-Billable Time: You will spend roughly 25-35% of your time on "business overhead"—invoicing, sales calls, learning new skills, and marketing.
- Benefits: You must fund your own health insurance, retirement contributions, and paid time off.
Step-by-Step Breakdown
1. Define Your Net Target: This is what you want to have in your bank account after all business expenses and taxes are paid.
2. Add Business Expenses: Include everything from your laptop and Adobe subscription to your home office deduction and health insurance premiums.
3. Calculate the "Gross-Up": Since taxes are taken out of your gross earnings, you must add your tax percentage back into your total requirement. If you need $100k and have a 25% tax rate, you actually need to earn $133,333.
4. Determine Billable Hours: There are 52 weeks in a year. If you take 4 weeks off (vacation/sick), you have 48 weeks. If you work 40 hours a week but only 25 are "billable" to clients, you have 1,200 billable hours per year.
Example Calculation
If you want a $70,000 net income, have $12,000 in expenses, and a 25% tax rate, you need to generate $109,333 in total revenue. If you bill 25 hours per week for 48 weeks (1,200 hours), your rate should be approximately $91.11 per hour.