Freelance Hourly Rate Calculator
Minimum Hourly Rate
$0.00
$0
Gross Revenue Needed
0
Billable Hours/Year
$0
Weekly Target
How to Calculate 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 take-home pay, but also your overhead costs, taxes, and unbillable time.
The Freelance Rate Formula
This calculator uses a "bottom-up" approach to determine your rate. It starts with your desired lifestyle (net income) and works backward to find what you must charge clients to achieve it. The core formula used is:
Hourly Rate = (Total Gross Revenue Needed) / (Total Billable Hours)
Key Factors in the Calculation
- Desired Net Income: This is the actual cash you want in your pocket after all business costs and taxes. Think of this as your "salary."
- Business Expenses: Freelancers must pay for their own software, hardware, internet, office space, and marketing. These costs reduce your taxable income but must be covered by your revenue.
- Tax Rate: Self-employment taxes can be significant. This calculator adjusts your revenue goal so that after taxes are deducted, you are left with your desired net income.
- Billable Hours: You cannot bill for 40 hours a week. Administrative tasks, marketing, and client acquisition are "non-billable." Most successful freelancers bill between 20-30 hours per week.
- Time Off: Freelancers do not get paid vacation. You must earn enough during your working weeks to cover the weeks you take off for holidays, sickness, or vacation.
Why Your Rate Seems High
If the result is higher than you expected, remember that a freelance hourly rate is not comparable to an employee hourly wage. An employee costing a company $40/hour might actually cost the company $60-$70/hour when benefits, payroll taxes, and overhead are included. As a freelancer, you are covering all those costs yourself.