Calculate exactly how much you need to charge per hour to reach your income goals, cover your business expenses, and account for taxes and time off.
Your Recommended Hourly Rate:$0.00
How to Calculate Your Freelance Hourly Rate
Many new freelancers make the mistake of simply dividing their previous salary by 2,080 (the number of work hours in a year). However, this ignores the reality of being a business owner. You must account for your own benefits, taxes, and the time you spend on non-billable tasks like marketing and invoicing.
1. Account for Billable vs. Non-Billable Hours
In a standard 40-hour work week, you aren't actually working for clients for all 40 hours. You have to handle administrative tasks, sales calls, and learning new skills. Most successful freelancers find that only 60% to 70% of their time is actually "billable."
2. Don't Forget the "Freelance Tax"
When you are employed, your employer pays a portion of your payroll taxes. As a freelancer, you are responsible for the full amount (Self-Employment Tax in the US). You also need to cover your own health insurance and retirement contributions.
Example Scenarios
Scenario
Target Annual Net
Billable %
Recommended Rate
The Side Hustler
$20,000
80%
$45 – $55 / hr
The Full-Time Creative
$75,000
60%
$95 – $110 / hr
The Specialist Consultant
$150,000
50%
$180 – $210 / hr
Adjusting for Profit Margin
The rate calculated above is your break-even rate to reach your income goal. To truly grow your business, consider adding a 10-20% profit margin on top of this number. This provides a buffer for quiet months and allows for reinvestment in your business tools and equipment.
function calculateFreelanceRate() {
var netIncome = parseFloat(document.getElementById('desiredNetIncome').value);
var monthlyExp = parseFloat(document.getElementById('monthlyExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value) / 100;
var daysOff = parseFloat(document.getElementById('daysOff').value);
var totalHoursWeek = parseFloat(document.getElementById('workHoursPerWeek').value);
var billablePercent = parseFloat(document.getElementById('billablePercentage').value) / 100;
if (isNaN(netIncome) || isNaN(monthlyExp) || isNaN(taxRate) || isNaN(daysOff) || isNaN(totalHoursWeek) || isNaN(billablePercent)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 1. Calculate Total Annual Expenses
var annualExpenses = monthlyExp * 12;
// 2. Calculate Gross Income Needed (to cover net income + expenses + taxes)
// Formula: Gross = (Net + Expenses) / (1 – TaxRate)
var requiredGross = (netIncome + annualExpenses) / (1 – taxRate);
// 3. Calculate Billable Weeks per Year
// Standard 52 weeks minus vacation/sick weeks
var weeksOff = daysOff / 5;
var billableWeeks = 52 – weeksOff;
// 4. Calculate Annual Billable Hours
var weeklyBillableHours = totalHoursWeek * billablePercent;
var annualBillableHours = billableWeeks * weeklyBillableHours;
// 5. Calculate Final Hourly Rate
var finalRate = 0;
if (annualBillableHours > 0) {
finalRate = requiredGross / annualBillableHours;
}
// Display Result
var resultBox = document.getElementById('freelance-result-box');
var output = document.getElementById('hourlyRateOutput');
var breakdown = document.getElementById('breakdownText');
resultBox.style.display = 'block';
output.innerText = '$' + finalRate.toFixed(2);
breakdown.innerHTML = "To net $" + netIncome.toLocaleString() + " per year, you must earn a gross total of $" + Math.round(requiredGross).toLocaleString() + " to cover taxes and expenses, working approximately " + Math.round(annualBillableHours) + " billable hours annually.";
}