Determine exactly what you need to charge to meet your income goals.
The take-home pay you want after taxes.
Software, internet, equipment, etc.
Combined federal and state tax estimate.
Hours actually paid by clients.
Vacation, sick days, and holidays.
Minimum Hourly Rate:$0.00
Total Annual Revenue Needed:$0.00
Total Billable Hours/Year:0
Estimated Taxes/Year:$0.00
function calculateFreelanceRate() {
// 1. Get Input Values
var targetIncome = parseFloat(document.getElementById('targetIncome').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var dailyBillableHours = parseFloat(document.getElementById('billableHours').value);
var weeksOff = parseFloat(document.getElementById('weeksOff').value);
// 2. Validate Inputs
if (isNaN(targetIncome) || isNaN(monthlyExpenses) || isNaN(taxRate) || isNaN(dailyBillableHours) || isNaN(weeksOff)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (dailyBillableHours = 1) taxDecimal = 0.99;
var requiredProfit = targetIncome / (1 – taxDecimal);
var totalRevenueNeeded = requiredProfit + annualExpenses;
var estimatedTaxAmount = requiredProfit * taxDecimal;
var hourlyRate = totalRevenueNeeded / totalAnnualHours;
// 4. Update DOM Results
document.getElementById('hourlyRateDisplay').innerText = "$" + hourlyRate.toFixed(2);
document.getElementById('annualRevenueDisplay').innerText = "$" + totalRevenueNeeded.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalHoursDisplay').innerText = totalAnnualHours.toLocaleString('en-US');
document.getElementById('totalTaxDisplay').innerText = "$" + estimatedTaxAmount.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Show results
document.getElementById('resultsSection').style.display = "block";
}
Understanding Your Freelance Hourly Rate
One of the most challenging aspects of transitioning to freelancing or running a solo agency is determining what to charge. Unlike a traditional salary, your freelance rate must cover not just your desired take-home pay, but also business taxes, overhead costs, and unpaid time spent on administrative tasks.
Using a Freelance Hourly Rate Calculator helps you reverse-engineer your pricing based on your lifestyle goals rather than guessing based on market averages.
The Formula Behind the Calculation
To calculate a sustainable rate, we use a "bottom-up" approach. Here is the logic used in the tool above:
Net Income Goal: This is the money you actually want to put in your bank account for personal use (rent, groceries, savings).
Business Overhead: We add your annual business expenses (software subscriptions, equipment, coworking space rent).
Taxes: Self-employment taxes are significant. We calculate the pre-tax profit required to leave you with your Net Income Goal after the government takes its share.
Billable Capacity: Finally, we divide the total gross revenue needed by the actual number of hours you can bill clients.
Why "Billable Hours" Matters
A common mistake new freelancers make is dividing their desired annual income by 2,080 hours (a standard 40-hour work week x 52 weeks). This is a recipe for burnout.
As a freelancer, you cannot bill for every hour you work. You must account for:
Marketing and business development
Invoicing and accounting
Skill development and training
Vacation and sick days (which are unpaid)
Most successful freelancers aim for 20 to 30 billable hours per week. The calculator above adjusts for your time off and realistic weekly capacity to give you a rate that ensures you hit your financial targets without working 60-hour weeks.
How to Use This Rate
Once you have your minimum hourly rate, view it as your floor price. Depending on your experience, niche demand, and the value you provide, you should aim to charge above this number to build a profit margin for business growth. If the calculated rate is higher than the market average for your industry, consider how you can reduce expenses or increase your billable efficiency.