Freelance Hourly Rate Calculator
How much do you want to take home?
Software, insurance, hardware, etc.
Buffer for growth/savings
Time actually spent on paid client work
Vacation, sick days, holidays
You need to charge at least:
$0.00 / hour
Total Revenue Needed:
$0
$0
Billable Hours/Year:
0
0
How to Calculate Your Freelance Hourly Rate
Transitioning from a salaried employee to a freelancer requires a fundamental shift in how you view your income. One of the biggest mistakes new freelancers make is equating their old hourly wage with their new freelance rate. This calculator helps you determine a sustainable rate by accounting for non-billable time, taxes, overhead, and profit.
Why Your "Take-Home" Pay is Just the Start
When you are employed, your employer covers the cost of software, office space, payroll taxes, and health insurance. As a freelancer, these are your overhead costs. Additionally, you are not paid for every hour you work. Time spent on marketing, invoicing, and answering emails is "non-billable," meaning your billable hours must subsidize this time.
The Freelance Rate Formula
To calculate an accurate hourly rate, we use a "Bottom-Up" approach:
- Determine Net Income: The amount you want to personally earn.
- Add Overhead: Add all business expenses (hosting, tools, internet).
- Account for Taxes: Gross up the total to ensure you have enough to pay the taxman.
- Add Profit Margin: A business should generate profit beyond the owner's salary for reinvestment or safety.
- Calculate Capacity: Determine realistic annual billable hours (Total Weeks – Time Off) × Billable Hours/Week.
Example Calculation
Let's look at a realistic scenario for a freelance graphic designer:
- Desired Salary: $60,000
- Expenses: $5,000/year
- Tax Rate: 25%
- Billable Work: 30 hours/week
- Time Off: 4 weeks/year
First, we calculate the revenue needed. To take home $60k + $5k expenses after 25% taxes, the business needs to gross roughly $86,666. With 4 weeks off, there are 48 working weeks. At 30 billable hours a week, that's 1,440 hours per year.
Result: $86,666 / 1,440 hours = ~$60.18 per hour.
Factors Influencing Your Rate
While this calculator gives you a minimum baseline, your market value may be higher based on:
- Experience Level: Senior experts charge premiums for efficiency.
- Niche Demand: Specialized skills (e.g., COBOL programming, medical writing) command higher rates.
- Project Value: If your work generates $100k for the client, a $100/hr rate is a bargain.