Freelance Hourly Rate Calculator
Your Minimum Hourly Rate Should Be:
How to Calculate Your Freelance Hourly Rate
Transitioning from a salaried role to freelancing requires a fundamental shift in how you view your time. You are no longer just an employee; you are a business owner responsible for your own overhead, taxes, and retirement. This calculator helps you determine exactly what you need to charge to maintain your lifestyle and grow your business.
1. Desired Net Income vs. Gross Revenue
Most new freelancers make the mistake of setting a target income that matches their old salary. However, a $70,000 salary as an employee is not the same as $70,000 in freelance revenue. You must account for self-employment taxes (which are usually higher), health insurance, and equipment costs. Our calculator starts with your "Take-Home" goal and works backwards to find the gross revenue needed.
2. Understanding Billable vs. Non-Billable Hours
In a 40-hour work week, a freelancer rarely spends 40 hours on client work. You will spend significant time on marketing, invoicing, administrative tasks, and professional development. For most freelancers, 20 to 30 billable hours per week is a realistic and sustainable range. If you base your rate on 40 hours but only bill 20, you will end up earning half of your goal.
3. Factoring in Overhead and Profit
Business expenses include everything from your Adobe Creative Cloud subscription and high-speed internet to your coworking space and hardware upgrades. Additionally, a healthy business should aim for a profit margin (usually 10-20%) above the owner's salary to allow for reinvestment and a financial safety net.
Example Calculation
If you want to take home $60,000, have $5,000 in annual expenses, and face a 25% tax rate, you actually need to generate roughly $85,000 in total revenue. If you work 48 weeks a year at 25 billable hours per week, that's 1,200 billable hours. $85,000 divided by 1,200 hours equals approximately $71 per hour.