Freelance Hourly Rate Calculator
Determine exactly what you need to charge clients to cover your expenses, taxes, and desired lifestyle.
How to Calculate Your Freelance Hourly Rate
Many freelancers make the mistake of simply multiplying their old office hourly rate by 40 hours a week. However, as a freelancer, you are responsible for your own health insurance, software subscriptions, hardware, and most importantly, taxes. Furthermore, you cannot bill 40 hours a week because a significant portion of your time is spent on "non-billable" tasks like marketing, invoicing, and lead generation.
The Formula We Use
Our calculator uses the "Bottom-Up" approach to ensure you never undercharge. The formula is as follows:
- Total Revenue Needed = (Desired Salary + Business Expenses) / (1 – Tax Rate)
- Total Billable Hours = Weeks Worked per Year × Billable Hours per Week
- Hourly Rate = Total Revenue Needed / Total Billable Hours
Realistic Example:
If you want a $70,000 take-home pay, have $5,000 in expenses, and pay 25% in taxes, you actually need to earn $100,000 in total revenue. If you work 48 weeks a year at 20 billable hours per week (960 hours total), your hourly rate should be $104.17.
Why Billable Hours Matter
In a standard job, you are paid for 40 hours regardless of whether you are in a meeting or writing code. In freelancing, you usually only charge for "deep work." Most successful freelancers find that they can only sustain 20 to 30 billable hours per week. Setting your rate based on 40 billable hours will almost certainly lead to a shortfall in your actual income.
Adjusting for Profit
The rate calculated above is your break-even rate to maintain your desired lifestyle. To grow your business, you should consider adding a 10-20% profit margin on top of this calculated rate. This allows you to build a "war chest" for slow months or future investments.