Formula for Calculate Interest Rate

Freelance Hourly Rate Calculator

The take-home pay you want per year.

Software, hardware, insurance, coworking, etc.

Hours actually charged to clients (not admin).

Vacation, sick days, and holidays.

Combined income and self-employment tax.

Extra margin for savings or business growth.

Please enter valid positive numbers for all fields.

function calculateFreelanceRate() { // Get input values var salary = parseFloat(document.getElementById('annualSalary').value); var expenses = parseFloat(document.getElementById('annualExpenses').value); var weeklyHours = parseFloat(document.getElementById('billableHours').value); var weeksOff = parseFloat(document.getElementById('weeksOff').value); var taxRate = parseFloat(document.getElementById('taxRate').value); var profitMargin = parseFloat(document.getElementById('profitMargin').value); // Error handling elements var errorDiv = document.getElementById('errorMsg'); var resultDiv = document.getElementById('resultBox'); // Validation if (isNaN(salary) || isNaN(expenses) || isNaN(weeklyHours) || isNaN(weeksOff) || isNaN(taxRate) || isNaN(profitMargin)) { errorDiv.style.display = 'block'; resultDiv.style.display = 'none'; return; } if (weeklyHours 168) { errorDiv.innerText = "Please enter a realistic number of weekly hours."; errorDiv.style.display = 'block'; resultDiv.style.display = 'none'; return; } errorDiv.style.display = 'none'; // 1. Calculate Working Weeks var workingWeeks = 52 – weeksOff; // 2. Calculate Total Billable Hours per Year var totalBillableHours = workingWeeks * weeklyHours; // 3. Calculate Gross Revenue Needed // Formula: (Net Salary + Expenses) / (1 – TaxRate%) * (1 + ProfitMargin%) // First, adjust for taxes to find pre-tax need covering salary and expenses var taxDecimal = taxRate / 100; var marginDecimal = profitMargin / 100; // Income needed to cover Salary + Expenses after taxes // Note: Expenses are usually tax deductible, but for simplicity in a basic goal calculator: // We assume you need to generate enough Gross to pay taxes AND have the Net Salary left. // Simplified Logic: Gross = (NetDesired + Expenses) / (1 – TaxRate) // *Wait, expenses reduce taxable income.* // Correct logic for freelancers: // Taxable Income = Gross – Expenses. // Taxes = Taxable Income * TaxRate. // Net Income = Gross – Expenses – Taxes. // We want Net Income = Salary. // Salary = Gross – Expenses – ((Gross – Expenses) * TaxRate) // Salary = (Gross – Expenses) * (1 – TaxRate) // Salary / (1 – TaxRate) = Gross – Expenses // Gross = (Salary / (1 – TaxRate)) + Expenses // Let's use this logic, then add the profit buffer on top of the total Gross. var preMarginGross = (salary / (1 – taxDecimal)) + expenses; var totalGrossNeeded = preMarginGross * (1 + marginDecimal); // 4. Calculate Hourly Rate var hourlyRate = totalGrossNeeded / totalBillableHours; // Display Results document.getElementById('hourlyRateResult').innerText = '$' + hourlyRate.toFixed(2) + ' / hr'; document.getElementById('grossRevenueResult').innerText = '$' + Math.round(totalGrossNeeded).toLocaleString(); document.getElementById('totalHoursResult').innerText = Math.round(totalBillableHours).toLocaleString(); resultDiv.style.display = 'block'; }

How to Calculate Your Freelance Hourly Rate

Determining the right hourly rate is one of the biggest challenges for freelancers, consultants, and independent contractors. Unlike a traditional salary, your freelance rate must cover not just your take-home pay, but also your business overhead, taxes (self-employment tax), health insurance, and unpaid time spent on administrative tasks.

This Freelance Hourly Rate Calculator uses a "reverse engineering" approach to determine exactly what you need to charge to maintain your desired lifestyle. Instead of guessing a number based on competitors, it builds a rate based on your specific financial needs.

Key Factors in the Calculation

• Desired Net Income: This is the money that actually lands in your personal bank account. Think of this as your "take-home" salary.
• Billable vs. Non-Billable Hours: You might work 40 hours a week, but you likely can't bill for all of them. Invoicing, marketing, and email management are unpaid. Most freelancers only bill 50-70% of their working time.
• Overhead Expenses: This includes software subscriptions (Adobe, Zoom), hardware, internet, coworking space fees, and professional insurance.
• Taxes: As a freelancer, you are responsible for both the employer and employee portion of taxes. A safe estimate for US-based freelancers is often 25-30% of net profit.

The Formula Used

To calculate your minimum hourly rate manually, follow these steps:

1. Calculate Total Billable Hours: (52 weeks – Weeks off) × Billable hours per week.
2. Determine Gross Revenue Needed: Calculate the pre-tax revenue required to cover your Net Salary and Expenses. Formula: (Desired Salary / (1 - Tax Rate)) + Expenses.
3. Add Profit Margin: Multiply your gross revenue by a buffer percentage (e.g., 10-20%) to ensure business stability.
4. Divide: Gross Revenue Needed / Total Billable Hours = Minimum Hourly Rate.

Example Calculation

Let's look at a realistic scenario for a freelance graphic designer:

• Desired Net Salary: $60,000
• Expenses: $5,000/year
• Billable Hours: 25 hours/week
• Time Off: 4 weeks/year
• Tax Rate: 30%

Using the logic above, the designer works 48 weeks × 25 hours = 1,200 billable hours/year. To take home $60k after 30% taxes and paying $5k expenses, they need to generate roughly $90,700 in gross revenue. Dividing $90,700 by 1,200 hours results in a rate of approximately $75.50/hour.