Freelance Hourly Rate Calculator
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Please enter valid numbers in all fields.
Minimum Hourly Rate
$0.00
Daily Rate
$0.00
Gross Annual Revenue Needed
$0.00
Total Billable Hours / Year
0
Why You Need a Freelance Hourly Rate Calculator
One of the biggest mistakes new freelancers make is choosing an hourly rate based on their previous full-time salary. They divide their old annual salary by 2,080 (the standard number of work hours in a year) and assume that is a fair market rate. This is a recipe for financial disaster.
As a freelancer, you are a business owner. Your hourly rate must cover not just your "take-home" pay, but also your taxes (which are higher for self-employed individuals), your health insurance, software subscriptions, hardware costs, and importantly, your unpaid time.
The Hidden Factors: Billable vs. Non-Billable Hours
In a corporate job, you get paid for the 8 hours you are at the office, regardless of whether you are in a meeting, chatting by the water cooler, or doing actual work. As a freelancer, you only get paid for billable hours.
The Freelance Hourly Rate Calculator above accounts for this by asking for your "Billable Hours per Day." If you work an 8-hour day, you might only spend 5 or 6 hours on client work. The rest is spent on:
- Invoicing and accounting
- Marketing and finding new clients
- Answering emails
- Professional development
How the Calculation Works
This tool uses a "Reverse Income" strategy to determine your rate:
- Target Net Income: We start with the money you want in your bank account at the end of the year.
- Add Overhead: We add your annual business expenses (internet, Adobe Creative Cloud, hosting, etc.).
- Account for Taxes: We gross up this amount so that after paying self-employment taxes, you are left with your target net income.
- Determine Capacity: We calculate exactly how many hours you can actually sell in a year, subtracting weekends, holidays, and vacation time.
- The Result: We divide your Total Revenue Need by your Total Capacity to find your Minimum Hourly Rate.
Example Calculation
Let's say you want to take home $60,000 a year. You have $500/month in expenses and estimate a 30% tax rate.
| Metric | Value |
|---|---|
| Target Net Income | $60,000 |
| Annual Expenses | $6,000 ($500 x 12) |
| Total Needed (After Tax) | $66,000 |
| Gross Revenue Needed | $94,285 ($66k รท 0.70) |
If you plan to work 6 billable hours a day, 5 days a week, with 4 weeks of vacation, you have 1,440 billable hours per year.
Your Rate: $94,285 / 1,440 hours = $65.48/hour.
Use the calculator above to find your specific number and ensure your freelance business is profitable from day one.