Hours actually charged to clients (exclude admin time).
Vacation, sick days, and holidays.
Optional: Add a percentage for savings or business growth.
Minimum Hourly Rate Required:
$0.00 / hr
Total Annual Revenue Goal: $0.00
Total Billable Hours per Year: 0
Effective Weekly Income: $0.00
function calculateHourlyRate() {
// Get input values
var incomeGoal = parseFloat(document.getElementById('se_income_goal').value);
var expenses = parseFloat(document.getElementById('se_expenses').value);
var hoursPerWeek = parseFloat(document.getElementById('se_billable_hours').value);
var weeksOff = parseFloat(document.getElementById('se_vacation_weeks').value);
var profitMargin = parseFloat(document.getElementById('se_profit_margin').value);
// Validation to prevent errors
if (isNaN(incomeGoal)) incomeGoal = 0;
if (isNaN(expenses)) expenses = 0;
if (isNaN(hoursPerWeek)) hoursPerWeek = 0;
if (isNaN(weeksOff)) weeksOff = 0;
if (isNaN(profitMargin)) profitMargin = 0;
// Logic check
if (hoursPerWeek <= 0) {
alert("Please enter valid billable hours per week.");
return;
}
// 1. Calculate Total Working Weeks
var totalWeeks = 52 – weeksOff;
if (totalWeeks <= 0) {
alert("Weeks off cannot equal or exceed 52.");
return;
}
// 2. Calculate Total Billable Hours
var totalBillableHours = totalWeeks * hoursPerWeek;
// 3. Calculate Base Revenue Needed
var baseRevenue = incomeGoal + expenses;
// 4. Add Profit Margin
// If margin is 20%, we want BaseRevenue to be 80% of Total, or we simply add 20% on top.
// Standard markup logic: Total = Base * (1 + Margin/100)
var totalRevenueNeeded = baseRevenue * (1 + (profitMargin / 100));
// 5. Calculate Hourly Rate
var hourlyRate = totalRevenueNeeded / totalBillableHours;
// 6. Calculate Weekly Income (Average over working weeks)
var weeklyIncome = totalRevenueNeeded / totalWeeks;
// Display Results
document.getElementById('se_result_container').style.display = 'block';
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('se_hourly_rate_result').innerHTML = formatter.format(hourlyRate) + " / hr";
document.getElementById('se_annual_revenue').innerHTML = formatter.format(totalRevenueNeeded);
document.getElementById('se_total_hours').innerHTML = Math.round(totalBillableHours).toLocaleString();
document.getElementById('se_weekly_income').innerHTML = formatter.format(weeklyIncome);
}
Mastering Your Self-Employment Pricing Strategy
Transitioning from a salaried employee to self-employment requires a fundamental shift in how you view money. Unlike a paycheck where taxes and benefits are already deducted, your freelance rate must cover your entire business ecosystem. Using a Self Employment Hourly Rate Calculator is the first step in ensuring your business model is sustainable and profitable.
Why You Can't Just Divide Your Salary by 2,080
A common mistake new freelancers make is taking their old annual salary and dividing it by 2,080 (the standard number of working hours in a 40-hour work week year). This method is disastrous for several reasons:
Billable vs. Non-Billable Hours: As an employee, you get paid for coffee breaks and meetings. As a freelancer, you only get paid when you are working on client projects. You must account for unpaid time spent on marketing, invoicing, and administration.
Overhead Costs: Employers pay for electricity, software licenses, computers, and office space. In self-employment, these are your "Annual Business Expenses" and must be factored directly into your hourly rate.
Self-Employment Taxes: You are now responsible for both the employer and employee portions of social security and Medicare taxes, plus income tax.
How This Calculator Works
This tool uses a "bottom-up" approach to pricing your services. Here is the logic behind the inputs:
1. Desired Annual Income
This is your personal salary goal. It represents what you want to earn gross (before personal taxes) to pay your personal bills, mortgage, and lifestyle costs. It serves as the baseline for your revenue requirements.
2. Unpaid Time (Weeks Off)
Freelancers often forget to account for sick days and vacations. If you plan to take 2 weeks of vacation and anticipate 1 week of sick time, you are only generating revenue for 49 weeks of the year. Your hourly rate must be higher to subsidize this time off.
3. The "Billable Efficiency" Factor
Very few self-employed individuals can bill 40 hours a week. A realistic efficiency rate is often between 60% and 75%. If you work 40 hours total, you might only bill 25 or 30 hours. The input "Billable Hours per Week" determines your inventory of sellable time. The lower this number, the higher your rate must be to meet your income goals.
Tips for Setting Your Rate
Add a Buffer: Always add a profit margin (10-20%) on top of your break-even number. This creates a safety net for slow months or allows you to reinvest in the business.
Market Check: Once you calculate your required rate, compare it to market averages. If your required rate is $150/hr but the market cap is $100/hr, you may need to reduce expenses or increase your billable hours.
Revisit Annually: Your expenses and efficiency will change. Use this calculator annually to adjust your rates for inflation and experience.