Freelance Hourly Rate Calculator
Determine exactly what you need to charge to meet your financial goals and cover business overhead.
Your Recommended Hourly Rate:
How to Calculate Your Freelance Hourly Rate
Setting your freelance rate is one of the most critical decisions for your business. Many new freelancers make the mistake of simply matching their previous "employee" hourly wage. However, freelancers must account for costs that employers usually cover, such as health insurance, equipment, software, self-employment taxes, and non-billable time (admin, marketing, and prospecting).
The "Bottom-Up" Formula
This calculator uses a bottom-up approach to ensure you don't end up underpaid. The formula is:
Hourly Rate = (Desired Net Income + Expenses + Taxes) / (Workable Weeks × Billable Hours)
Key Factors to Consider
- The Tax Gap: As a freelancer, you are responsible for both the employer and employee portions of Social Security and Medicare. Setting aside 25-30% of your gross income for taxes is a standard rule of thumb.
- Non-Billable Hours: You will likely spend 20-30% of your time on activities you cannot charge for. If you "work" 40 hours a week, you might only "bill" 25-30 hours.
- Business Expenses: Include your laptop, software subscriptions (Adobe, SaaS tools), office rent, internet, and professional insurance.
Realistic Example:
If you want to take home $60,000, have $8,000 in annual expenses, and face a 25% tax rate, you actually need a gross revenue of roughly $88,000. If you work 48 weeks a year (taking 4 weeks off) and bill 25 hours per week, your hourly rate must be at least $73.33.
If you want to take home $60,000, have $8,000 in annual expenses, and face a 25% tax rate, you actually need a gross revenue of roughly $88,000. If you work 48 weeks a year (taking 4 weeks off) and bill 25 hours per week, your hourly rate must be at least $73.33.
When Should You Increase Your Rates?
You should consider raising your freelance rates if you meet any of the following criteria:
- Your schedule is 100% full for more than 3 months.
- You have gained a specialized certification or skill that adds value.
- You haven't adjusted for inflation in over 12 months.
- Your "close rate" for new proposals is over 80% (this often indicates you are the "budget" option).