Freelance Hourly Rate Calculator
To meet your goals, your hourly rate should be:
$0.00
How to Calculate Your Freelance Hourly Rate
Determining your freelance rate is one of the most critical steps in building a sustainable solo business. Unlike a traditional employee, a freelancer must cover their own taxes, health insurance, equipment, and non-billable time (like marketing and invoicing). This calculator helps you reverse-engineer your rate based on your lifestyle needs and business costs.
The Formula Behind the Calculation
To find your ideal rate, we use a comprehensive formula that accounts for both "working" time and "earning" time:
- Total Annual Expenses: (Monthly Overhead × 12) + Desired Take-Home Salary.
- Adjusting for Taxes: We gross up your target income to account for self-employment taxes.
- Adding Profit: A 10-20% profit margin is added to ensure your business can reinvest in new equipment or training.
- Working Weeks: 52 weeks minus your desired vacation and sick days.
- Billable Hours: Most freelancers only spend 60-70% of their time on billable client work; the rest is administration.
Real-World Example
Let's say you want a $60,000 annual salary with $500 in monthly expenses. You plan to take 4 weeks of vacation and can realistically bill 25 hours per week. Including a 25% tax rate and a 10% profit margin, your calculation would look like this:
- Annual Target (including expenses): $66,000
- Adjusted for 25% Tax: $88,000
- Plus 10% Profit: $96,800 total revenue needed
- Total Billable Hours: 48 weeks × 25 hours = 1,200 hours
- Required Rate: $80.67 per hour
Why You Should Never Use "Employee Math"
If you simply divide a $60,000 salary by 2,080 hours (the standard full-time year), you get $28.85/hour. However, as a freelancer, if you charge that amount, you will end up earning significantly less than your target after you pay for your own laptop, health insurance, and the weeks you don't work. Always use a dedicated calculator to ensure your business remains profitable.