Your Minimum Hourly Rate
$0.00
Gross Revenue Needed
$0
Total Billable Hours
0
How to Calculate Your Freelance Hourly Rate
Determining the right hourly rate is one of the most critical steps for any freelancer or consultant. Unlike a salaried employee, your hourly rate must cover not just your take-home pay, but also your taxes, business expenses, and the time you spend on non-billable tasks like marketing and administration.
Understanding the Formula
This Freelance Hourly Rate Calculator uses a "bottom-up" approach to ensure all your financial needs are met. Here is how the numbers break down:
- Desired Net Income: This is the amount of money you want to put in your pocket after all expenses and taxes are paid. Think of this as your salary.
- Business Expenses: These are the costs to run your business, including software subscriptions, hardware, home office costs, internet, and professional insurance.
- Tax Rate: As a freelancer, you are responsible for both the employee and employer portion of taxes in many jurisdictions (self-employment tax). A safe estimate often ranges between 25% and 35%.
- Billable Hours: You cannot bill for every hour you work. Administrative tasks, emailing, and finding clients are "unpaid" work. A typical full-time freelancer might only bill 20–30 hours a week.
Why "Billable Hours" Matter
If you plan to work 40 hours a week, you might be tempted to divide your desired salary by 2,080 (40 hours * 52 weeks). This is a mistake. You need to account for vacation time, sick days, and holidays. Furthermore, realistically, you may only spend 60-70% of your work time actually doing work for clients. The rest is overhead. This calculator adjusts for your weeks off and specific billable capacity to give you a realistic minimum rate.
When to Raise Your Rates
The rate calculated above is your minimum baseline to sustain your lifestyle. However, pricing is also determined by market value, expertise, and demand. If the calculator outputs $60/hr, but the market rate for your specific skill set is $100/hr, you should charge the market rate to signal quality and maximize profit.