Freelance Hourly Rate Calculator
Calculate exactly what to charge to meet your financial goals
Your Target Hourly Rate:
$0.00
How to Determine Your Freelance Hourly Rate
Setting a freelance rate is one of the most challenging aspects of starting a service-based business. Unlike a traditional salary, your hourly rate must cover more than just your "take-home" pay. You are responsible for your own taxes, equipment, software, insurance, and the time you spend on non-billable tasks like marketing and bookkeeping.
The Formula for Success
To calculate a sustainable rate, we use the "Bottom-Up" approach. We start with what you need to survive and thrive, then work backward to find the hourly number. The logic follows these steps:
- Step 1: Gross Revenue Target. This is your desired net salary + business expenses + taxes.
- Step 2: Billable Capacity. Total working days in a year (usually 260) minus holidays and sick leave.
- Step 3: Real Billable Hours. Most freelancers spend only 50-70% of their time on client work. The rest is administration.
- Step 4: The Final Math. Gross Revenue Target divided by Total Billable Hours per year.
Example Calculation:
If you want $70,000 in your pocket, have $10,000 in expenses, and pay 25% tax, you need to earn $106,666 gross. If you work 5 billable hours a day for 235 days a year (1,175 hours), your rate should be approximately $91 per hour.
If you want $70,000 in your pocket, have $10,000 in expenses, and pay 25% tax, you need to earn $106,666 gross. If you work 5 billable hours a day for 235 days a year (1,175 hours), your rate should be approximately $91 per hour.
Key Factors to Consider
When using this calculator, consider these variables that often catch new freelancers off guard:
- Self-Employment Tax: In many regions, you pay both the employer and employee portion of social security taxes.
- The Utilization Gap: You will not bill 40 hours a week. Expecting to bill 8 hours a day is a recipe for burnout and financial shortfall.
- Value-Based Pricing: While an hourly rate is a great baseline, for high-impact projects, consider if the value you provide exceeds your hourly cost.
Frequently Asked Questions
Should I publish my rates?
It depends. Publishing a "starting at" rate helps filter out low-budget leads, while keeping rates private allows for more flexible pricing based on the project's complexity.
How often should I raise my rates?
Most experts recommend reviewing your rates annually. A 5-10% increase per year is standard to account for inflation and your increasing expertise.