If My Hourly Rate Calculator

Freelance Target Hourly Rate Calculator

Determine what you need to charge to meet your annual financial goals.

How much money do you want in your pocket after taxes and expenses?

Include software, equipment, insurance, and estimated tax burden.

Standard year is 52 weeks. Subtract vacation and sick time (e.g., 48 weeks).

Realistic hours spent actually doing paid client work (excluding admin, marketing tasks). Usually 20-30 for full-time.

Results

To achieve your goal, your required hourly rate is:

Based on:

• Total Revenue Goal:
• Total Billable Hours per Year: hours

function calculateRequiredRate() { var desiredNetIncomeStr = document.getElementById('desiredNetIncome').value; var annualExpensesStr = document.getElementById('annualExpenses').value; var weeksWorkedStr = document.getElementById('weeksWorked').value; var billableHoursPerWeekStr = document.getElementById('billableHoursPerWeek').value; // Basic validation to ensure inputs are numbers if (desiredNetIncomeStr === "" || annualExpensesStr === "" || weeksWorkedStr === "" || billableHoursPerWeekStr === "") { alert("Please fill in all fields containing numbers."); return; } var desiredNetIncome = parseFloat(desiredNetIncomeStr); var annualExpenses = parseFloat(annualExpensesStr); var weeksWorked = parseFloat(weeksWorkedStr); var billableHoursPerWeek = parseFloat(billableHoursPerWeekStr); if (isNaN(desiredNetIncome) || isNaN(annualExpenses) || isNaN(weeksWorked) || isNaN(billableHoursPerWeek)) { alert("Please enter valid numbers."); return; } if (weeksWorked <= 0 || billableHoursPerWeek 0) { requiredHourlyRate = totalGrossRevenueNeeded / totalAnnualBillableHours; } else { // Handle edge case extremely improbable by the check above, but good practice alert("Total billable hours cannot be zero."); return; } // Formatting output var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 2 }); document.getElementById('finalHourlyRate').innerHTML = formatter.format(requiredHourlyRate) + " / hr"; document.getElementById('totalRevenueGoal').innerHTML = formatter.format(totalGrossRevenueNeeded); document.getElementById('totalBillableHours').innerHTML = totalAnnualBillableHours.toFixed(0); document.getElementById('rateResult').style.display = 'block'; }

Understanding Your Worth: The "If My Hourly Rate" Calculation

For freelancers, consultants, and independent contractors, determining your hourly rate is one of the most challenging business decisions. Unlike a traditional employee salary, your hourly rate isn't just about what you get paid; it has to cover your entire business overhead, taxes, and non-billable time.

Many new freelancers make the mistake of looking at their previous hourly wage as an employee and adding a small percentage. This approach often leads to undercharging because it fails to account for the hidden costs of running a business. If you charge $40 an hour, you do not keep $40 an hour.

Why Your Hourly Rate Needs to Be Higher Than an Employee Wage

When you work for yourself, you take on responsibilities previously handled by an employer. Your "If My Hourly Rate" calculation needs to factor in:

• Self-Employment Taxes: You are responsible for both the employer and employee portions of Social Security and Medicare taxes.
• Business Expenses: You must pay for your own hardware, software subscriptions, internet, home office costs, and professional insurance.
• Non-Billable Time: You cannot bill clients for time spent invoicing, marketing your services, answering emails, or taking time off for sickness or vacation. A standard 40-hour workweek might only yield 25 hours of actual billable work.

How to Use This Calculator

This calculator works backward from your financial goals to determine necessary pricing. Here is how to determine your inputs:

1. Desired Annual Net Income: This is your target "take-home" pay—the amount of money you want available for personal living expenses, savings, and investments after the business is taken care of.
2. Estimated Annual Business Expenses & Taxes: Be realistic. Sum up anticipated costs for software, accounting fees, health insurance premiums, and estimate roughly 25-30% of your gross income for taxes depending on your location.
3. Weeks Worked Per Year: There are 52 weeks in a year. If you plan to take two weeks of vacation and allow two weeks for potential illness or holidays, enter 48 weeks.
4. Billable Hours Per Week: This is crucial. It is rarely 40 hours. If you spend 15 hours a week on admin, marketing, and sales, you only have 25 hours left to bill clients. Overestimating this number will result in a rate that is too low.

A Realistic Example

Let's assume you want a comfortable take-home income similar to a mid-level salary, and you want a healthy work-life balance.

• Desired Net Income: $65,000
• Expenses & Taxes: $30,000 (covering taxes, health insurance, and software)
• Weeks Worked: 48 (4 weeks off total)
• Billable Hours Per Week: 25 hours (leaving time for admin work)

The Calculation:
First, calculate the total gross revenue needed: $65,000 + $30,000 = $95,000 total revenue goal.
Next, calculate total annual billable hours: 48 weeks * 25 hours/week = 1,200 billable hours.
Finally, divide revenue by hours: $95,000 / 1,200 hours = $79.17 per hour.

In this scenario, to net $65k, your "keep the lights on" hourly rate needs to be roughly $80/hr. Knowing this minimum floor is essential for negotiation and ensuring your freelance business is viable.