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Freelance Hourly Rate Calculator

Determine exactly what you need to charge to meet your financial goals.

function calculateFreelanceRate() { var targetSalary = parseFloat(document.getElementById('targetSalary').value); var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value); var taxRate = parseFloat(document.getElementById('taxRate').value); var billableHours = parseFloat(document.getElementById('billableHours').value); var vacationWeeks = parseFloat(document.getElementById('vacationWeeks').value); if (isNaN(targetSalary) || isNaN(monthlyExpenses) || isNaN(taxRate) || isNaN(billableHours) || isNaN(vacationWeeks)) { alert("Please enter valid numbers in all fields."); return; } // 1. Calculate Annual Expenses var annualExpenses = monthlyExpenses * 12; // 2. Total Pre-tax Income Needed to reach Net Salary // Formula: Net = Gross * (1 – TaxRate) -> Gross = Net / (1 – TaxRate) var taxMultiplier = 1 – (taxRate / 100); var grossSalaryNeeded = targetSalary / taxMultiplier; // 3. Total Annual Revenue Required var totalRevenueNeeded = grossSalaryNeeded + annualExpenses; // 4. Calculate Billable Hours per Year var workWeeks = 52 – vacationWeeks; var totalAnnualHours = workWeeks * billableHours; if (totalAnnualHours <= 0) { alert("Billable hours or work weeks must be greater than zero."); return; } // 5. Final Hourly Rate var hourlyRate = totalRevenueNeeded / totalAnnualHours; document.getElementById('hourlyRateOutput').innerText = "$" + hourlyRate.toFixed(2); document.getElementById('breakdownOutput').innerText = "To earn $" + targetSalary.toLocaleString() + " net, you need a total annual revenue of $" + Math.round(totalRevenueNeeded).toLocaleString(); document.getElementById('resultDisplay').style.display = "block"; }

How to Calculate Your Freelance Hourly Rate

Transitioning from a full-time employee to a freelancer often leads to one major mistake: simply dividing your old salary by 2,000 hours. This approach fails to account for taxes, overhead, and non-billable time. To build a sustainable freelance business, you must use a value-based or cost-plus pricing strategy.

The Formula for Freelance Success

Our calculator uses the "Bottom-Up" method. We start with your desired lifestyle and work backward to find the rate that supports it. Here is the math we use:

• Desired Net Income: This is what you want to keep in your pocket after all expenses and taxes.
• Business Overhead: Includes your laptop, software subscriptions (SaaS), health insurance, and home office costs.
• The Tax Trap: As a freelancer, you pay both the employer and employee portions of social security and Medicare (in the US). You must "gross up" your income to account for this.
• Billable vs. Actual Hours: You cannot bill 40 hours a week. Admin, marketing, and invoicing usually take up 20-30% of your time.

Realistic Example: The Graphic Designer

Sarah wants to take home $60,000 a year. Her expenses (software and insurance) are $400/month. She expects a 25% tax rate. She wants 4 weeks of vacation and knows she can only realistically bill 20 hours per week after accounting for finding new clients.

The Math:
Total Expenses: $4,800/yr
Gross Needed for Taxes: $80,000
Total Revenue Needed: $84,800
Annual Billable Hours: 48 weeks × 20 hours = 960 hours
Required Rate: $88.33 per hour

Why You Should Charge More Than You Think

Many new freelancers feel "imposter syndrome" and set rates too low. Remember that your hourly rate isn't just for the work performed; it covers your retirement, your equipment, your sick days, and the years of expertise you bring to the table. If you charge $30/hour because your last job paid that, you are effectively earning 40% less than your previous salary once you factor in the lack of benefits.

When to Increase Your Rates

If your schedule is 80% full, it is time to raise your rates. Most senior freelancers increase their rates by 10-15% annually to keep up with inflation and their growing expertise. Use this calculator every six months to ensure your business remains profitable as your expenses or income goals change.