Calculate exactly what you need to charge to meet your annual income goals.
Total Annual Revenue Needed:$0.00
Total Billable Hours per Year:0
Minimum Hourly Rate (Break-even):$0.00
Recommended Hourly Rate (w/ Profit):$0.00
function calculateHourlyRate() {
// Get input values
var salary = parseFloat(document.getElementById('desiredSalary').value);
var expenses = parseFloat(document.getElementById('annualExpenses').value);
var weeklyHours = parseFloat(document.getElementById('billableHours').value);
var vacation = parseFloat(document.getElementById('vacationWeeks').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var profitMargin = parseFloat(document.getElementById('profitMargin').value);
// Validation
if (isNaN(salary) || isNaN(expenses) || isNaN(weeklyHours) || isNaN(vacation) || isNaN(taxRate)) {
alert("Please fill in all required fields with valid numbers.");
return;
}
if (vacation >= 52) {
alert("Vacation weeks must be less than 52.");
return;
}
// Logic
// 1. Calculate Working Weeks
var workingWeeks = 52 – vacation;
// 2. Calculate Total Billable Hours
var totalBillableHours = workingWeeks * weeklyHours;
if (totalBillableHours <= 0) {
alert("Total billable hours result in zero. Please check your weeks off and weekly hours.");
return;
}
// 3. Calculate Revenue Goal to hit Net Salary
// Formula: (Salary / (1 – TaxRate)) + Expenses
var taxDecimal = taxRate / 100;
var grossSalaryNeeded = salary / (1 – taxDecimal);
var totalRevenueNeeded = grossSalaryNeeded + expenses;
// 4. Calculate Minimum Hourly Rate
var minHourlyRate = totalRevenueNeeded / totalBillableHours;
// 5. Calculate Recommended Rate with Profit Margin
var profitDecimal = isNaN(profitMargin) ? 0 : profitMargin / 100;
var recommendedRate = minHourlyRate * (1 + profitDecimal);
var recommendedRevenue = totalRevenueNeeded * (1 + profitDecimal);
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
// Display Results
document.getElementById('totalRevenueDisplay').innerHTML = formatter.format(recommendedRevenue);
document.getElementById('totalHoursDisplay').innerHTML = Math.round(totalBillableHours);
document.getElementById('minRateDisplay').innerHTML = formatter.format(minHourlyRate);
document.getElementById('recRateDisplay').innerHTML = formatter.format(recommendedRate);
// Show result section
document.getElementById('result').style.display = 'block';
}
Understanding Your Freelance Hourly Rate
Determining the correct hourly rate is one of the most critical challenges for freelancers and consultants. Unlike a salaried employee, your rate must cover not just your take-home pay, but also taxes, business overhead, equipment, software, and unpaid time spent on administrative tasks. This calculator uses a "bottom-up" approach to derive a rate that ensures your business remains profitable and sustainable.
Pro Tip: Most freelancers underestimate their non-billable time. A standard work week implies 40 hours, but you may only be able to bill clients for 20-25 hours. The rest is spent on marketing, invoicing, and learning.
Key Factors in the Calculation
Desired Annual Net Income: This is the actual cash you want to take home after all expenses and taxes are paid. Think of this as your "salary."
Business Expenses: These are the costs to run your business, including web hosting, software subscriptions, laptop upgrades, internet, co-working space fees, and professional insurance.
Billable Hours: The number of hours you actually invoice clients for. If you work 40 hours a week, you might only bill 60-70% of that time.
Taxes: As a freelancer, you are responsible for both the employer and employee portion of taxes (self-employment tax). This is often significantly higher than standard payroll tax rates.
Why "Profit Margin" Matters
Many freelancers calculate a break-even rate that barely covers their costs. However, a healthy business needs profit to grow. Adding a 10% to 20% profit margin allows you to:
Reinvest in better equipment or training.
Build a cash buffer for lean months.
Outsource tasks like accounting or graphic design.
Use the calculator above to experiment with different scenarios. Seeing how a few weeks of vacation or a higher tax bracket affects your required hourly rate can help you negotiate better contracts with confidence.