Calculate what you need to charge to meet your financial goals.
$
The "take-home" amount you want after business expenses.
$
Software, insurance, hardware, office, etc.
52 weeks minus vacation, sick days, and holidays.
Hours spent on client work (excludes admin/marketing).
Recommended Hourly Rate
$0.00
How to Calculate Your Rate Per Hour
Transitioning from a traditional salary to a freelance or contractor model requires a shift in how you view your earnings. You aren't just getting paid for your time; you are running a business. This means your hourly rate must cover your personal needs, your business overhead, and your "unbillable" time.
The Hourly Rate Formula
To find your ideal rate, we use the "Bottom-Up" approach:
Hourly Rate = (Annual Desired Salary + Annual Business Expenses) / (Weeks per Year × Billable Hours per Week)
Key Factors to Consider
The "Unbillable" Trap: Most freelancers spend 20-30% of their time on administration, marketing, and invoicing. If you work 40 hours a week, you might only "bill" for 25-30 of them.
Time Off: Remember to subtract weeks for vacation, sick leave, and public holidays. Typically, using 47 or 48 weeks is more realistic than 52.
Taxes: Unlike an employee, you are responsible for both the employer and employee portions of social security or local income taxes. Many experts suggest adding an extra 20-30% to your rate to cover this.
Example Calculation
If you want to earn a $70,000 salary and your expenses (laptop, coffee, coworking, software) total $5,000, your total revenue goal is $75,000. If you plan to work 48 weeks a year and bill 20 hours per week: