function calculateFreelanceRate() {
// 1. Get input values
var targetNet = parseFloat(document.getElementById('targetSalary').value);
var expenses = parseFloat(document.getElementById('annualExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var hoursPerWeek = parseFloat(document.getElementById('billableHours').value);
var weeksOff = parseFloat(document.getElementById('vacationWeeks').value);
// 2. Validate inputs
if (isNaN(targetNet) || isNaN(expenses) || isNaN(taxRate) || isNaN(hoursPerWeek) || isNaN(weeksOff)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (hoursPerWeek 168) {
alert("Please enter a realistic number of billable hours per week.");
return;
}
// 3. Perform Calculations
// Calculate the Gross Income needed to net the Target Salary after taxes
// Formula: Gross = Net / (1 – TaxRate)
// Note: This logic assumes expenses are tax-deductible, so we add expenses to the revenue requirement,
// but the tax is calculated on (Revenue – Expenses).
// Target Net Income is what you want in your pocket.
// Gross Taxable Income Needed = Target Net / (1 – (TaxRate / 100))
var taxableIncomeNeeded = targetNet / (1 – (taxRate / 100));
// Total Gross Revenue = Taxable Income Needed + Expenses
var totalRevenueNeeded = taxableIncomeNeeded + expenses;
// Calculate Total Working Hours
var workingWeeks = 52 – weeksOff;
var totalBillableHours = workingWeeks * hoursPerWeek;
if (totalBillableHours <= 0) {
alert("Total billable hours cannot be zero. Please adjust weeks off or hours per week.");
return;
}
var hourlyRate = totalRevenueNeeded / totalBillableHours;
var dailyRate = hourlyRate * (hoursPerWeek / 5); // Assuming 5 day work week average for daily rate context
var weeklyTarget = totalRevenueNeeded / workingWeeks;
// 4. Update the DOM
document.getElementById('hourlyRateDisplay').innerHTML = '$' + hourlyRate.toFixed(2);
document.getElementById('dailyRateDisplay').innerHTML = '$' + dailyRate.toFixed(2);
document.getElementById('weeklyTargetDisplay').innerHTML = '$' + weeklyTarget.toFixed(2);
document.getElementById('grossRevenueDisplay').innerHTML = '$' + totalRevenueNeeded.toFixed(2);
// Show results
document.getElementById('results').style.display = 'block';
}
Understanding Your Freelance Hourly Rate
Setting the correct hourly rate is one of the most critical decisions you will make as a freelancer or consultant. Unlike a traditional salary, your freelance rate must cover not just your desired take-home pay, but also your business expenses, taxes (including the self-employment tax), and unpaid time off. Many new freelancers make the mistake of simply dividing their previous annual salary by 2,080 hours (the standard 40-hour work week year), resulting in a rate that is far too low.
How This Calculator Works
This calculator uses a "reverse engineering" approach to determine your minimum viable rate. Here is the breakdown of the logic used:
Tax Adjustment: We first calculate the pre-tax income required to hit your target "take-home" pay based on your estimated tax bracket.
Overhead Inclusion: Business expenses (software, hardware, insurance, coworking space) are added to the total revenue requirement.
Billable Utilization: Instead of assuming you work 52 weeks a year, we subtract your desired vacation and sick time. We also calculate rate based strictly on billable hours, not total working hours, ensuring you are paid for administration and marketing time.
Why Billable Hours Matter
It is rarely possible to bill 40 hours a week consistently. Administrative tasks, client acquisition, invoicing, and professional development are unbilled activities. A healthy freelance business typically maintains a utilization rate of 60% to 75%. If you plan to work a standard 40-hour week, you should likely input 25 to 30 billable hours into the calculator to ensure your rate covers your non-billable time.
Factors That Influence Your Rate
While this calculator provides a mathematical baseline (your "floor"), your market rate (your "ceiling") depends on several other factors:
Experience & Expertise: Senior specialists command higher premiums than generalists.
Value Delivered: Pricing based on value provided to the client rather than just time spent.
Industry Standards: Rates vary significantly between graphic design, software development, and management consulting.
Urgency: Rush jobs should incur a surcharge, effectively raising your hourly yield.
Next Steps
Once you have calculated your minimum hourly rate, compare it against industry averages. If your calculated rate is significantly higher than the market average, you may need to reduce expenses or increase your billable hours. If it is lower, you have room to increase your profit margin. Remember to review your rate annually to account for inflation and increased experience.