Freelance Hourly Rate Calculator
Determine exactly what you need to charge to meet your income goals and cover taxes.
Minimum Hourly Rate:
$0.00
Daily Target Income:
$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. Unlike a salaried employee, your rate must cover not just your take-home pay, but also your taxes, business overhead, health insurance, and retirement contributions. Furthermore, you are not paid for every hour you work; you are only paid for billable hours.
The Freelance Rate Formula
This calculator uses a reverse-engineering approach to find your ideal rate. The logic follows these steps:
- Total Needs: Adds your desired net income to your annual business expenses.
- Tax Adjustment: Grosses up that amount so you have enough left over after paying taxes (Self-Employment Tax, Income Tax).
- Billable Capacity: Calculates the actual number of hours you can charge clients, subtracting weekends and vacation time.
Why Billable Hours Matter
Many new freelancers make the mistake of dividing their desired salary by 2,080 (a standard 40-hour work week for 52 weeks). However, as a freelancer, you spend time on marketing, invoicing, and administration. A realistic billable utilization rate is often between 50% and 70% of your total working time. If you plan to work 8 hours a day, you might only be able to bill for 5 of those hours.
Factors to Consider When Pricing
While this calculator gives you a mathematical baseline (your "break-even" or "target" rate), your market rate may differ based on:
- Experience & Expertise: Specialized skills command higher premiums.
- Market Demand: High demand allows for higher rates.
- Project Complexity: Difficult projects justify a higher markup.
Use the result from this tool as your minimum floor. Never price below this number if you want to maintain your target lifestyle.