Freelance Hourly Rate Calculator
Calculate the perfect rate to meet your income goals and cover expenses.
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Please enter valid positive numbers for all fields.
Minimum Hourly Rate
$0.00
Total Annual Revenue Needed (Gross):
$0
Estimated Taxes:
$0
Total Billable Hours / Year:
0
Why Use a Freelance Hourly Rate Calculator?
Transitioning from a salaried employee to a freelancer requires a fundamental shift in how you view your income. Unlike a paycheck, your freelance rate must cover not just your salary, but also your business expenses, taxes, health insurance, and unpaid time off.
Many new freelancers make the mistake of simply dividing their previous annual salary by 2,080 (the standard number of work hours in a year). This calculation leads to undercharging because it ignores non-billable hours—time spent on marketing, accounting, and client acquisition—which are uncompensated.
Key Factors in Your Hourly Rate
- Desired Net Income: The actual take-home pay you need to support your lifestyle.
- Business Expenses: Costs including software subscriptions, hardware, office space, internet, and professional development.
- Billable Hours: Realistically, you cannot bill 40 hours a week. A healthy benchmark is 50-60% billable time, with the rest dedicated to business administration.
- Taxes: As a freelancer, you are often responsible for both the employer and employee portion of taxes (self-employment tax).
How to Calculate Your Rate Manually
If you want to understand the math behind our calculator, here is the formula:
1. Calculate Total Gross Income Needed:
(Desired Net Income + Expenses) / (1 – Tax Rate %)
2. Calculate Total Billable Hours:
(52 weeks – Weeks Off) × Billable Hours Per Week
3. Determine Hourly Rate:
Total Gross Income / Total Billable Hours
Example Calculation
Let's say you want to take home $60,000. You have $5,000 in expenses and expect a 25% tax rate. You plan to work 30 billable hours a week and take 4 weeks off.
First, gross income needed: ($60,000 + $5,000) / 0.75 = $86,666.
Next, total hours: (52 – 4) * 30 = 1,440 hours.
Final Rate: $86,666 / 1,440 = $60.18 per hour.
Use the calculator above to experiment with different scenarios to find a rate that is competitive yet profitable.