Determine exactly what to charge to meet your income goals.
$
Please enter a valid income amount.
$
Software, insurance, internet, office space, etc.
Hrs
Hours actually paid by clients (exclude admin/marketing time).
Wks
Vacation, sick days, and holidays.
%
Self-employment tax + income tax.
Gross Income Needed (Pre-Tax):–
Total Annual Expenses:–
Total Billable Hours/Year:–
Minimum Hourly Rate:–
Understanding Your Freelance Hourly Rate
Setting the right hourly rate is one of the most critical challenges for freelancers, consultants, and independent contractors. Unlike a salaried employee, your hourly rate must cover not just your take-home pay, but also your taxes, business overhead, and unpaid time spent on administrative tasks.
Why You Can't Just Divide Your Salary by 2080
A common mistake new freelancers make is taking their desired annual salary and dividing it by 2,080 (the standard number of work hours in a 40-hour week year). This method is flawed for three main reasons:
Unbillable Time: You cannot bill clients for time spent invoicing, marketing, answering emails, or learning new skills. Most freelancers only bill 50-70% of their working hours.
Overhead Costs: Employers usually pay for health insurance, hardware, software subscriptions, and office space. As a freelancer, these expenses come directly out of your revenue.
Self-Employment Taxes: In many jurisdictions, you are responsible for both the employer and employee portion of social security and medicare taxes, significantly increasing your tax burden.
How This Calculator Works
This tool uses a reverse-engineering approach to determine your rate based on your financial needs:
1. Net Income Adjustments
We start with your desired "take-home" pay. The calculator then adjusts this figure to account for taxes. For example, if you want $60,000 net and have a 25% tax rate, you actually need to earn $80,000 before taxes just to cover your salary.
2. Factoring in Overhead
Your monthly business expenses (SaaS subscriptions, internet, co-working space fees) are annualized and added to your total revenue target. If you spend $500/month, that's an additional $6,000/year you must earn.
3. Determining True Billable Capacity
We calculate your total available working weeks by subtracting vacation and sick time from the 52-week year. Then, we multiply the remaining weeks by your billable hours per week. This gives a realistic view of your inventory—the actual hours you can sell.
Example Calculation
Let's say you want to take home $75,000 per year.
Taxes (30%): You need to earn roughly $107,142 pre-tax.
Expenses ($300/mo): Add $3,600/yr. Total Revenue Target = $110,742.
Time Off: 4 weeks vacation means 48 working weeks.
Billable Hours: You can bill 25 hours/week. Total Hours = 1,200.
Result: $110,742 / 1,200 hours = $92.29/hour.
Using this calculator ensures you don't undercharge and find yourself working overtime just to make ends meet.
function calculateRate() {
// Clear previous alerts
var incomeAlert = document.getElementById('incomeAlert');
incomeAlert.style.display = 'none';
// Get Input Values
var desiredNetIncome = parseFloat(document.getElementById('annualIncome').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
var billableHoursPerWeek = parseFloat(document.getElementById('billableHours').value);
var weeksOff = parseFloat(document.getElementById('weeksOff').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
// Validation Logic
var isValid = true;
if (isNaN(desiredNetIncome) || desiredNetIncome < 0) {
incomeAlert.style.display = 'block';
isValid = false;
}
// Set defaults for optional fields if empty or NaN to prevent calculation errors
if (isNaN(monthlyExpenses)) monthlyExpenses = 0;
if (isNaN(billableHoursPerWeek) || billableHoursPerWeek = 1) taxDecimal = 0.99;
var grossIncomeNeededForSalary = desiredNetIncome / (1 – taxDecimal);
// 3. Total Revenue Target
var totalRevenueTarget = grossIncomeNeededForSalary + annualExpenses;
// 4. Calculate Total Billable Hours per Year
var workingWeeks = 52 – weeksOff;
var totalBillableHours = workingWeeks * billableHoursPerWeek;
// Safety check for hours
if (totalBillableHours <= 0) totalBillableHours = 1;
// 5. Calculate Hourly Rate
var hourlyRate = totalRevenueTarget / totalBillableHours;
// Formatting results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
// Display Results
document.getElementById('grossIncomeResult').innerText = formatter.format(grossIncomeNeededForSalary);
document.getElementById('expensesResult').innerText = formatter.format(annualExpenses);
document.getElementById('hoursResult').innerText = totalBillableHours.toLocaleString('en-US') + " hrs";
document.getElementById('finalRateResult').innerText = formatter.format(hourlyRate);
// Show result section
document.getElementById('results').style.display = 'block';
}