Freelance Hourly Rate Calculator
Calculate exactly what you need to charge per hour to hit your net income goals after taxes and expenses.
How to Calculate Your Freelance Hourly Rate
Setting your freelance rate is one of the most critical steps in building a sustainable business. Many new freelancers make the mistake of simply looking at what their previous employer paid them hourly and adding a few dollars. However, this fails to account for the "hidden costs" of self-employment.
1. Accounting for Taxes and Overhead
When you are an employee, your company pays half of your social security and Medicare taxes. As a freelancer, you are responsible for the full "Self-Employment Tax." Furthermore, you no longer have a company providing your laptop, software subscriptions, or health insurance. You must add these annual expenses to your desired take-home pay before calculating your rate.
2. The Billable vs. Non-Billable Trap
If you work 40 hours a week, you are likely only doing "billable" client work for 20 to 25 of those hours. The rest of your time is spent on marketing, bookkeeping, sending invoices, and finding new clients. If you calculate your rate based on a 40-hour billable week, you will consistently fall short of your financial goals.
3. Realistic Example
Let's say you want to take home $70,000 per year. Your expenses (insurance, software, laptop) are $8,000. You live in an area with a 25% average tax rate. You plan to take 4 weeks of vacation (48 billable weeks) and can realistically bill for 20 hours per week.
- Total Required Revenue: ($70,000 + $8,000) / (1 – 0.25) = $104,000 roughly.
- Total Billable Hours: 48 weeks * 20 hours = 960 hours.
- Hourly Rate: $104,000 / 960 = $108.33 per hour.
Why Use This Calculator?
This tool uses a professional-grade formula to ensure you don't forget the math that keeps freelancers in business. By inputting your specific tax bracket and realistic billable hours, you protect your profit margins and ensure that your business remains a viable career path rather than a low-paying hobby.