Freelance Hourly Rate Calculator
Calculate exactly what you should charge to meet your income goals and cover business costs.
How to Calculate Your Freelance Hourly Rate
Determining your freelance hourly rate is one of the most critical business decisions you will make. Unlike a traditional salary, your hourly rate must cover your take-home pay, business overhead, taxes, and non-billable hours spent on marketing and administration.
The Reality of Billable vs. Non-Billable Hours
Many new freelancers make the mistake of assuming they will be "billable" for 40 hours a week. In reality, most freelancers spend 25% to 40% of their time on tasks they cannot charge clients for, such as:
- Invoicing and bookkeeping
- Sending proposals and networking
- Learning new skills and software
- General business administration
This is why our calculator includes an Efficiency field. If you work 40 hours a week but only spend 24 hours on client projects, your efficiency is 60%.
Factoring in Taxes and Overhead
As a freelancer, you are responsible for the full share of self-employment taxes, health insurance, and retirement savings. A common rule of thumb is to set aside 25% to 30% of your gross income for taxes. Furthermore, your "Monthly Expenses" should include your software subscriptions (Adobe, Zoom, Slack), hardware upgrades, office rent, and professional insurance.
Step-by-Step Calculation Formula
Our calculator uses the following professional formula:
- Calculate Gross Revenue Needed: (Net Salary + Annual Expenses) / (1 – Tax Rate)
- Calculate Annual Working Weeks: 52 – Weeks of Vacation/Sick Leave
- Calculate Weekly Billable Hours: Total Hours * (Efficiency / 100)
- Final Rate: Gross Revenue / (Weekly Billable Hours * Working Weeks)
Example Scenario
If you want to take home $60,000, have $400 in monthly expenses, take 4 weeks off, and are 60% efficient on a 40-hour work week with a 25% tax rate:
- Gross Revenue Goal: ~$86,400
- Total Yearly Billable Hours: 1,152 hours
- Required Hourly Rate: $75.00