Calculate exactly what you need to charge to meet your income goals.
The amount of money you want to take home after taxes and expenses.
Software, hardware, internet, office space, insurance, etc.
Hours you actually charge clients (exclude admin work).
Vacation, sick days, and holidays.
Estimate your income tax and self-employment tax percentage.
Minimum Hourly Rate:$0.00
Total Billable Hours/Year:0
Gross Revenue Needed:$0.00
Estimated Taxes:$0.00
How to Calculate Your Freelance Hourly Rate
Setting the right hourly rate is one of the most critical decisions you will make as a freelancer or consultant. Price yourself too low, and you risk burnout and financial instability. Price yourself too high without justification, and you may struggle to attract clients. This calculator helps you work backward from your financial goals to determine a sustainable rate.
Why "Billable Hours" Matter
Many new freelancers make the mistake of dividing their desired salary by 2,080 (the standard number of working hours in a 40-hour work week year). This is a fatal error. As a business owner, you cannot bill for every hour you work. You must account for:
Admin Tasks: Invoicing, emails, and project management.
Business Development: Marketing, pitching, and networking.
Skill Development: Learning new tools and trends.
Realistically, most freelancers only bill 50% to 75% of their working time. Our calculator allows you to input your specific billable hours to give you a true break-even rate.
Accounting for Taxes and Expenses
Unlike a traditional W-2 employee, your freelance income is "Gross Revenue," not a paycheck. You are responsible for:
Self-Employment Taxes: Social Security and Medicare contributions often double what employees pay.
Income Tax: Federal and state taxes based on your tax bracket.
Overhead: Health insurance, software subscriptions, equipment, and office costs.
The logic used in this calculator adds your expenses to your desired net income, then grosses up that amount to account for taxes using the formula: (Net Income + Expenses) / (1 - Tax Rate).
Strategies for Increasing Your Rate
If the calculated rate seems higher than the market average, consider these strategies to increase your value:
Specialize: Niche experts can command higher rates than generalists.
Switch to Value-Based Pricing: Instead of billing by the hour, price based on the value or ROI you deliver to the client.
Reduce Overhead: Audit your business expenses to see where you can save.
function calculateRate() {
// Get input values
var desiredIncomeInput = document.getElementById('desiredIncome').value;
var annualExpensesInput = document.getElementById('annualExpenses').value;
var billableHoursInput = document.getElementById('billableHours').value;
var weeksOffInput = document.getElementById('weeksOff').value;
var taxRateInput = document.getElementById('taxRate').value;
// Validate inputs
var desiredIncome = parseFloat(desiredIncomeInput);
var annualExpenses = parseFloat(annualExpensesInput);
var billableHours = parseFloat(billableHoursInput);
var weeksOff = parseFloat(weeksOffInput);
var taxRate = parseFloat(taxRateInput);
if (isNaN(desiredIncome) || isNaN(annualExpenses) || isNaN(billableHours) || isNaN(weeksOff) || isNaN(taxRate)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (weeksOff >= 52) {
alert("Weeks off cannot match or exceed 52 weeks.");
return;
}
if (taxRate >= 100) {
alert("Tax rate cannot be 100% or more.");
return;
}
// Calculations
// 1. Calculate working weeks
var workingWeeks = 52 – weeksOff;
// 2. Calculate total annual billable hours
var totalAnnualHours = workingWeeks * billableHours;
if (totalAnnualHours <= 0) {
alert("Total billable hours must be greater than zero.");
return;
}
// 3. Calculate Gross Revenue Needed
// Formula Logic: We need enough revenue so that after expenses and taxes, we have desiredIncome left.
// Profit = Revenue – Expenses
// Taxes = Profit * (TaxRate/100)
// NetIncome = Profit – Taxes
// NetIncome = Profit * (1 – TaxRate/100)
// Profit = NetIncome / (1 – TaxRate/100)
// Revenue = Profit + Expenses
// Therefore: Revenue = (NetIncome / (1 – TaxRate/100)) + Expenses
var taxDecimal = taxRate / 100;
var requiredProfit = desiredIncome / (1 – taxDecimal);
var grossRevenue = requiredProfit + annualExpenses;
// Calculate actual tax amount for display
// Tax is paid on Profit (Gross – Expenses)
var estimatedTaxAmount = (grossRevenue – annualExpenses) * taxDecimal;
// 4. Calculate Hourly Rate
var hourlyRate = grossRevenue / totalAnnualHours;
// Display Results
document.getElementById('result-area').style.display = 'block';
// Format currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('hourlyRateDisplay').innerText = formatter.format(hourlyRate);
document.getElementById('grossRevenueDisplay').innerText = formatter.format(grossRevenue);
document.getElementById('taxDisplay').innerText = formatter.format(estimatedTaxAmount);
document.getElementById('totalHoursDisplay').innerText = Math.round(totalAnnualHours).toLocaleString();
}