function calculateFreelanceRate() {
// 1. Get input values
var desiredNetIncome = parseFloat(document.getElementById('desiredIncome').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var billableHoursPerWeek = parseFloat(document.getElementById('billableHours').value);
var weeksOff = parseFloat(document.getElementById('weeksOff').value);
// 2. Validate inputs
if (isNaN(desiredNetIncome) || desiredNetIncome <= 0) {
alert("Please enter a valid desired annual income.");
return;
}
if (isNaN(monthlyExpenses)) monthlyExpenses = 0;
if (isNaN(taxRate)) taxRate = 0;
if (isNaN(billableHoursPerWeek) || billableHoursPerWeek = 1) {
alert("Tax rate cannot be 100% or more.");
return;
}
var totalCashNeeded = desiredNetIncome + annualExpenses;
var grossRevenueNeeded = totalCashNeeded / (1 – taxDecimal);
// Calculate Work Capacity
var weeksWorking = 52 – weeksOff;
var totalBillableHours = weeksWorking * billableHoursPerWeek;
// Calculate Rate
var hourlyRate = grossRevenueNeeded / totalBillableHours;
var dailyTarget = hourlyRate * (billableHoursPerWeek / 5); // Average based on 5 day week work load distribution, though billable hours might differ
// 4. Update UI
document.getElementById('hourlyRateDisplay').innerHTML = "$" + hourlyRate.toFixed(2);
document.getElementById('dailyTargetDisplay').innerHTML = "$" + (hourlyRate * 8).toFixed(2); // Assuming 8h availability, implies day rate
document.getElementById('grossRevenueDisplay').innerHTML = "$" + grossRevenueNeeded.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalHoursDisplay').innerHTML = totalBillableHours.toFixed(0);
// Show results
document.getElementById('results').style.display = 'block';
}
How to Calculate Your Freelance Hourly Rate
Determining the right hourly rate is one of the most challenging aspects of freelancing. Unlike a traditional salary, your freelance rate must cover not just your take-home pay, but also your taxes, business expenses, health insurance, and unpaid time spent on administrative tasks. Using a Freelance Hourly Rate Calculator ensures you don't undervalue your services.
Why You Can't Just Divide Your Old Salary by 2,080
A common mistake new freelancers make is taking their previous annual salary and dividing it by 2,080 (the standard number of work hours in a year: 40 hours x 52 weeks). This approach is flawed for several reasons:
Billable vs. Non-Billable Hours: As a freelancer, you cannot bill clients for every hour you work. You spend time marketing, invoicing, and answering emails. A realistic billable utilization rate is often 50-60%.
Overhead Costs: Employers usually pay for software, hardware, and office space. As a freelancer, these are your expenses.
Taxes: In many jurisdictions, freelancers pay both the employee and employer portion of social security and medicare taxes (Self-Employment Tax).
No Paid Time Off: If you don't work, you don't get paid. Your rate must be high enough to buffer for vacations and sick days.
The Formula for Freelance Success
To calculate a sustainable rate, you must work backward from your financial goals. The basic formula used in our calculator is:
(Desired Net Income + Annual Business Expenses) ÷ (1 – Tax Rate) ÷ Total Billable Hours
This ensures that after you pay your expenses and the government, the amount landing in your personal bank account matches your lifestyle goals.
What is a Good Billable Hour Ratio?
If you plan to work a standard 40-hour week, do not assume you will have 40 billable hours. A healthy target for established freelancers is roughly 25 to 30 billable hours per week. The remaining 10-15 hours are invested in business growth and administration. If you input 40 billable hours into the calculator, you risk burning out or falling short of your income targets because you didn't account for the time needed to find new clients.
Adjusting for Market Value
While this calculator tells you the minimum you need to charge to survive, it doesn't dictate the maximum. Always compare your calculated rate against market averages for your specific skill set. If the math says you need $60/hr but the market rate for your expertise is $120/hr, you should charge $120/hr and enjoy the higher profit margin.
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"acceptedAnswer": {
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"text": "To calculate your freelance rate, take your desired annual net income, add your annual business expenses, and adjust for taxes to find your Gross Revenue Needed. Divide this number by your total billable hours per year (typically weeks working minus vacation, multiplied by billable hours per week)."
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"name": "Should I charge hourly or per project?",
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