Determine exactly what you need to charge to meet your lifestyle and income goals.
Your Minimum Hourly Rate
$0.00
Gross Annual Revenue Needed:$0.00
Total Billable Hours / Year:0
Weekly Revenue Target:$0.00
Daily Rate (8h equivalent):$0.00
How to Calculate Your True Freelance Rate
Transitioning from a salaried employee to a freelancer requires a fundamental shift in how you view your income. One of the most common mistakes new freelancers make is attempting to match their salaried hourly wage directly. This calculator accounts for the "hidden" costs of self-employment to ensure your business remains profitable.
The Formula Behind the Calculator
To determine a sustainable hourly rate, we use a reverse-engineering approach based on your financial goals. The core formula used in this tool is:
Gross Revenue Needed = (Desired Net Income + Annual Expenses) / (1 – Tax Rate %)
Total Billable Hours = (52 Weeks – Weeks Off) × Billable Hours Per Week
Unlike a 9-to-5 job where you are paid for 40 hours regardless of productivity, freelancers only get paid when they are working on client projects. This is the concept of Billable Hours.
You must account for non-billable administrative tasks such as:
Invoicing and Bookkeeping
Marketing and Pitching Clients
Skill Development and Training
Email and Communication
A healthy freelance business typically averages 20-30 billable hours per week. If you calculate your rate based on a 40-hour billable week, you will likely burnout or fall short of your income goals.
Accounting for Overhead and Taxes
As a W-2 employee, your employer covers payroll taxes, health insurance, software licenses, and office equipment. As a freelancer, these are your Annual Business Expenses. Furthermore, you are responsible for the full burden of self-employment taxes. Our calculator adjusts your gross revenue requirement to ensure that after you pay your taxes and expenses, you are left with your actual Desired Net Income.
function calculateFreelanceRate() {
// 1. Get Input Values
var netIncome = parseFloat(document.getElementById('desiredNetIncome').value);
var expenses = parseFloat(document.getElementById('annualExpenses').value);
var weeklyHours = parseFloat(document.getElementById('billableHours').value);
var weeksOff = parseFloat(document.getElementById('weeksOff').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
// 2. Validation
if (isNaN(netIncome) || netIncome < 0) netIncome = 0;
if (isNaN(expenses) || expenses < 0) expenses = 0;
if (isNaN(weeklyHours) || weeklyHours <= 0) weeklyHours = 1; // Prevent div by zero
if (isNaN(weeksOff) || weeksOff < 0) weeksOff = 0;
if (isNaN(taxRate) || taxRate < 0) taxRate = 0;
// 3. Logic Implementation
// Calculate Working Weeks
var workingWeeks = 52 – weeksOff;
if (workingWeeks = 1) taxDecimal = 0.99; // Prevent div by zero or negative if 100% tax
var grossRevenueNeeded = (netIncome + expenses) / (1 – taxDecimal);
// Calculate Hourly Rate
var hourlyRate = grossRevenueNeeded / totalBillableHours;
// Calculate Derived Metrics
var weeklyTarget = grossRevenueNeeded / workingWeeks;
var dailyRate = hourlyRate * 8; // Standard day equivalent
// 4. Update UI
// Helper function for currency formatting
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('displayHourlyRate').innerHTML = formatter.format(hourlyRate);
document.getElementById('displayGrossRevenue').innerHTML = formatter.format(grossRevenueNeeded);
document.getElementById('displayTotalHours').innerHTML = Math.round(totalBillableHours).toLocaleString();
document.getElementById('displayWeeklyTarget').innerHTML = formatter.format(weeklyTarget);
document.getElementById('displayDailyRate').innerHTML = formatter.format(dailyRate);
// Show results area
document.getElementById('resultsArea').style.display = 'block';
}