Freelance Hourly Rate Calculator
Calculate your ideal hourly rate based on desired income and business expenses.
Calculation Summary
Required Hourly Rate
How to Accurately Determine Your Freelance Rate
Transitioning from a salaried role to independent contracting requires a fundamental shift in how you view your "hourly wage." Unlike employees, freelancers must cover their own overhead, healthcare, retirement contributions, and unpaid time off.
The "Billable Hour" Trap
Many new freelancers assume a 40-hour work week. However, business administration, marketing, invoicing, and lead generation are essential but non-billable tasks. For most professionals, 25 to 30 billable hours per week is a realistic target. If you over-estimate your billable hours, you will consistently fall short of your income goals.
Factoring in Taxes and Overhead
In most jurisdictions, self-employed individuals are responsible for both the employer and employee portions of social security or payroll taxes. Our calculator accounts for this by adjusting your net income goal upward based on your estimated tax bracket. Additionally, business expenses—including software subscriptions (Adobe Creative Cloud, CRM tools), hardware, office space, and professional insurance—must be added to your base income requirement.
The Formula Used
Total Revenue Goal = (Desired Net Income + Annual Expenses) / (1 – Tax Rate %)
Annual Billable Hours = (52 – Vacation Weeks) × Weekly Billable Hours
Hourly Rate = Total Revenue Goal / Annual Billable Hours
Real-World Example
If you want to take home $60,000 net, have $5,000 in annual expenses, pay a 25% tax rate, take 4 weeks of vacation, and bill 25 hours per week:
- Your total revenue goal must be $86,667.
- Your total annual billable hours will be 1,200 (48 weeks × 25 hours).
- Your required hourly rate is $72.22.