To meet your goals, your minimum hourly rate should be:
$0.00
Total Annual Revenue Needed: $0
Total Billable Hours per Year: 0
Monthly Target (Gross): $0
Effective Weekly Rate: $0
How to Determine Your Hourly Freelance Rate
Transitioning from a salaried employee to an independent contractor requires a shift in how you view compensation. You are no longer just an employee; you are a business. This means your hourly rate must cover not only your "paycheck" but also your taxes, health insurance, equipment, and non-billable time.
The Components of a Contractor Rate
Desired Net Salary: This is the take-home pay you want to achieve after all business expenses and taxes are paid.
Business Overhead: Includes your laptop, software subscriptions (Adobe, SaaS tools), office space, professional insurance, and marketing costs.
The Tax Gap: As a contractor, you are responsible for both the employer and employee portions of social security and local taxes. This typically ranges from 20% to 35% depending on your location.
Non-Billable Time: You cannot bill 40 hours a week, 52 weeks a year. You must account for admin tasks, prospecting, sick days, and holidays.
Example Calculation
If you want to earn a net salary of $75,000 per year, have $5,000 in overhead, pay a 25% tax rate, take 4 weeks of vacation, and work 25 billable hours per week:
Don't just stick to the mathematical minimum. Most senior SEO experts and developers suggest adding a 10-15% "profit margin" or "risk buffer" to your calculated rate. This ensures that if a project takes longer than expected or a client pays late, your personal finances remain stable.
function calculateHourlyRate() {
// Get values from input fields
var desiredSalary = parseFloat(document.getElementById('desiredSalary').value);
var annualExpenses = parseFloat(document.getElementById('annualExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var vacationWeeks = parseFloat(document.getElementById('vacationWeeks').value);
var billableHoursPerWeek = parseFloat(document.getElementById('billableHours').value);
// Validate inputs
if (isNaN(desiredSalary) || desiredSalary <= 0) {
alert("Please enter a valid desired salary.");
return;
}
if (isNaN(annualExpenses)) annualExpenses = 0;
if (isNaN(taxRate)) taxRate = 0;
if (isNaN(vacationWeeks)) vacationWeeks = 0;
if (isNaN(billableHoursPerWeek) || billableHoursPerWeek <= 0) {
alert("Please enter your billable hours per week.");
return;
}
// Math Logic
// 1. Calculate Gross Revenue Needed (Adjusting for Taxes and Overhead)
// Formula: (Salary + Expenses) / (1 – (TaxRate/100))
var decimalTax = taxRate / 100;
var grossRevenueNeeded = (desiredSalary + annualExpenses) / (1 – decimalTax);
// 2. Calculate Total Billable Hours Per Year
var workingWeeks = 52 – vacationWeeks;
if (workingWeeks <= 0) {
alert("Vacation weeks cannot be 52 or more.");
return;
}
var totalYearlyHours = workingWeeks * billableHoursPerWeek;
// 3. Final Hourly Rate
var hourlyRate = grossRevenueNeeded / totalYearlyHours;
// 4. Secondary Metrics
var monthlyGross = grossRevenueNeeded / 12;
var weeklyRate = grossRevenueNeeded / workingWeeks;
// Display Results
document.getElementById('hourlyRateDisplay').innerText = '$' + hourlyRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalRevenue').innerText = '$' + Math.round(grossRevenueNeeded).toLocaleString();
document.getElementById('totalYearlyHours').innerText = totalYearlyHours.toLocaleString();
document.getElementById('monthlyGross').innerText = '$' + Math.round(monthlyGross).toLocaleString();
document.getElementById('weeklyRate').innerText = '$' + Math.round(weeklyRate).toLocaleString();
// Show result area
document.getElementById('resultArea').style.display = 'block';
// Smooth scroll to results
document.getElementById('resultArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}