Freelance Hourly Rate Calculator
Minimum Hourly Rate:
$0.00
Weekly Billing Target:
$0.00
Gross Annual Revenue Needed:
$0.00
Total Billable Hours/Year:
0
How to Calculate Your Freelance Hourly Rate
Setting the right hourly rate is one of the most challenging aspects of freelancing. If you price yourself too low, you risk burnout and financial instability. If you price yourself too high without justification, you may struggle to attract clients. This Freelance Hourly Rate Calculator uses a "reverse engineering" approach to determine exactly what you need to charge to meet your financial goals.
The Formula Behind the Calculation
Unlike a salaried employee who gets paid for every hour they are in the office (plus paid vacation, health insurance, and employer tax contributions), a freelancer must cover all these costs within their billable hours. The calculation logic used above is:
- Total Expenses: Your desired take-home pay plus your business overhead costs (software, hardware, co-working space, etc.).
- Tax Adjustments: We adjust your target income to account for self-employment taxes and income tax, ensuring your "Net Income" is truly what you keep.
- Billable Capacity: We calculate your actual working year by subtracting vacation and sick weeks from the standard 52-week year. Then, we multiply this by your realistic billable hours per week (which is rarely 40 hours due to admin work, marketing, and sales).
Why Billable Hours Matter
New freelancers often make the mistake of dividing their desired salary by 2,080 (40 hours x 52 weeks). This is a critical error. As a business owner, you will spend 25-50% of your time on non-billable tasks such as:
- Invoicing and accounting
- Client prospecting and proposal writing
- Professional development
- Email management
If you plan to work 40 hours a week, a realistic billable target is likely between 20 and 30 hours. This calculator adjusts for that reality, ensuring your paid hours subsidize your unpaid administrative time.
Factoring in Profit Margin
Your rate shouldn't just cover your salary and bills; it should generate a profit for the business. This profit can be reinvested into better equipment, used for expansion, or saved as a rainy-day fund. We recommend adding a 10-20% profit margin on top of your base costs to ensure long-term business sustainability.