Freelance Hourly Rate Calculator
The pre-tax salary you want to earn per year.
Software, hardware, internet, insurance, etc.
Hours you can actually charge clients (exclude admin time).
Vacation, sick days, and holidays.
Buffer for growth and savings (optional).
Minimum Hourly Rate
$0.00
Daily Rate (8 hours)
$0.00
Total Annual Revenue Goal
$0.00
Total Billable Hours / Year
0
Understanding Your Freelance Hourly Rate
Determining the correct hourly rate is one of the most critical challenges for freelancers, consultants, and independent contractors. Unlike a salaried employee, your rate must cover not just your desired take-home pay, but also your business overhead, taxes, self-employment benefits, and unbillable time.
Why You Cannot Just Divide Your Previous Salary by 2,080
A common mistake new freelancers make is taking their previous annual salary and dividing it by 2,080 (the standard number of work hours in a year: 40 hours x 52 weeks). This approach fails to account for:
- Unbillable Time: You will spend significant time on marketing, accounting, pitching, and administrative tasks for which you cannot charge clients.
- Operating Expenses: You are now responsible for your own hardware, software subscriptions, internet, and office space.
- Time Off: Freelancers do not get paid vacation or sick leave. Your working rate must accrue enough revenue to cover time off.
- Taxes: The self-employment tax burden requires a higher gross income to achieve the same net purchasing power.
How This Calculator Works
This Freelance Hourly Rate Calculator uses a reverse-engineering approach to find your minimum viable rate. Here is the logic behind the numbers:
- Total Revenue Requirement: We sum your Desired Annual Income and your Annual Business Expenses. If you add a Profit Margin, we increase the total requirement by that percentage to ensure business growth.
- Billable Capacity: We calculate your total working weeks (52 minus Weeks Off) and multiply that by your realistic Billable Hours Per Week. This gives your Total Billable Hours per Year.
- The Rate Formula: Finally, we divide the Total Revenue Requirement by the Total Billable Hours to determine the precise hourly amount you need to charge to meet your financial goals.
Tips for Setting Your Rate
Once you calculate your minimum rate, consider market factors. If your calculated rate is significantly lower than the market average for your skill set, you should charge the market rate and treat the difference as extra profit. If your calculated rate is higher, you may need to reduce expenses, increase billable hours, or specialize your skills to justify the premium price.