The amount you want to take home after taxes and expenses.
Software, equipment, insurance, marketing costs, etc.
Combined federal, state, and self-employment taxes.
Hours actually charged to clients (exclude admin time).
Vacation, holidays, and sick days.
Minimum Hourly Rate:$0.00
Gross Revenue Needed:$0.00
Total Billable Hours/Year:0
Estimated Taxes:$0.00
function calculateFreelanceRate() {
// Get inputs
var targetIncome = parseFloat(document.getElementById("targetIncome").value);
var annualExpenses = parseFloat(document.getElementById("annualExpenses").value);
var taxRate = parseFloat(document.getElementById("taxRate").value);
var billableHours = parseFloat(document.getElementById("billableHours").value);
var weeksOff = parseFloat(document.getElementById("weeksOff").value);
// Validation
if (isNaN(targetIncome) || isNaN(annualExpenses) || isNaN(taxRate) || isNaN(billableHours) || isNaN(weeksOff)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (taxRate >= 100) {
alert("Tax rate must be less than 100%.");
return;
}
// Calculations
// 1. Calculate working weeks
var workingWeeks = 52 – weeksOff;
// 2. Calculate total yearly billable hours
var totalBillableHours = workingWeeks * billableHours;
if (totalBillableHours <= 0) {
alert("Total billable hours must be greater than zero. Please adjust weeks off or weekly hours.");
return;
}
// 3. Calculate Gross Revenue needed to net the target income
// Formula: (Target Income + Expenses) / (1 – Tax Rate percentage)
var taxMultiplier = 1 – (taxRate / 100);
var grossRevenueNeeded = (targetIncome + annualExpenses) / taxMultiplier;
// 4. Calculate Taxes amount
var totalTaxes = grossRevenueNeeded – targetIncome – annualExpenses;
// 5. Calculate Hourly Rate
var minHourlyRate = grossRevenueNeeded / totalBillableHours;
// Display Results
document.getElementById("hourlyRateResult").innerText = "$" + minHourlyRate.toFixed(2);
document.getElementById("grossRevenueResult").innerText = "$" + grossRevenueNeeded.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalHoursResult").innerText = totalBillableHours.toLocaleString('en-US');
document.getElementById("taxesResult").innerText = "$" + totalTaxes.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Show results div
document.getElementById("resultsArea").style.display = "block";
}
How to Calculate Your Freelance Hourly Rate
Setting the right hourly rate is one of the most critical decisions a freelancer makes. If you charge too little, you risk burnout and financial instability; charge too much without justification, and you might struggle to secure clients. This calculator uses a "reverse engineering" approach to determine what you need to charge based on your desired lifestyle and financial goals.
The Formula Explained
Unlike a traditional salary where taxes are withheld and overhead is covered by the employer, a freelancer is responsible for the full financial picture. To determine a viable hourly rate, you must account for three distinct layers of cost:
Net Income: This is the actual take-home pay you need to support your personal lifestyle (rent, food, savings).
Business Overhead: These are the costs to keep your business running, such as software subscriptions, hardware upgrades, internet, and professional insurance.
Self-Employment Taxes: Freelancers often pay a higher effective tax rate because they are responsible for both the employee and employer portion of Social Security and Medicare taxes, plus income tax.
Billable vs. Non-Billable Hours
A common mistake is dividing your desired annual income by 2,080 (the standard number of work hours in a 40-hour/week job). As a freelancer, you cannot bill for every hour you work. Administrative tasks, marketing, invoicing, and professional development are non-billable.
This calculator asks for your Billable Hours per Week. For most full-time freelancers, this number typically ranges between 20 and 30 hours, leaving the rest of the week for business management.
Why Factor in Time Off?
Freelancers do not get paid vacation or sick leave. To ensure you can afford to take a break without losing income, your hourly rate during working weeks must be high enough to subsidize your time off. Entering your planned vacation time allows the calculator to compress your required revenue into fewer working weeks, ensuring your annual goals are met.
Interpreting Your Results
Minimum Hourly Rate: This is the floor, not the ceiling. It represents the mathematical minimum you must charge to meet your financial targets. Depending on your industry, experience level, and the value you provide, you should aim to charge above this number to build a profit margin for business growth.
Gross Revenue Needed: This is the total amount you need to invoice your clients throughout the year. It covers your salary, your business bills, and the tax man.