Permanent Salary to Contract Rate Calculator

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Freelance Hourly Rate Calculator

Calculate the perfect rate to hit your annual income goals

Income Goals

Take-home pay you want after taxes and expenses.
Federal + State + Self-Employment taxes.

Expenses & Time

Software, hosting, insurance, office rent, etc.
Vacation, sick days, and holidays.
Hours actually invoiced to clients (exclude admin tasks).

Your Minimum Hourly Rate

$0.00
Total Revenue Needed:
$0
Total Billable Hours:
0
function calculateRate() { // Get inputs var desiredNet = parseFloat(document.getElementById('desiredIncome').value); var taxRate = parseFloat(document.getElementById('taxRate').value); var monthlyExp = parseFloat(document.getElementById('monthlyExpenses').value); var weeksOff = parseFloat(document.getElementById('weeksOff').value); var hoursPerWeek = parseFloat(document.getElementById('billableHours').value); // Validation if (isNaN(desiredNet) || isNaN(taxRate) || isNaN(monthlyExp) || isNaN(weeksOff) || isNaN(hoursPerWeek)) { alert("Please fill in all fields with valid numbers."); return; } if (weeksOff >= 52) { alert("Weeks off cannot equal or exceed 52 weeks."); return; } // Calculations var annualExpenses = monthlyExp * 12; var workingWeeks = 52 – weeksOff; var totalBillableHours = workingWeeks * hoursPerWeek; // To get Desired Net, we need to account for taxes on the Gross Revenue // Formula: Net = Gross – Expenses – (Gross * TaxRate) // This is slightly simplified (taxing gross) but safer for freelancing estimation // More accurate: Revenue Needed = (Net + Expenses) / (1 – TaxRate) var taxDecimal = taxRate / 100; var grossRevenueNeeded = (desiredNet + annualExpenses) / (1 – taxDecimal); // Check for division by zero or infinite if tax is 100% if (taxDecimal >= 1) { alert("Tax rate cannot be 100% or more."); return; } var hourlyRate = grossRevenueNeeded / totalBillableHours; // Display Results document.getElementById('resultContainer').style.display = 'block'; document.getElementById('finalRate').innerHTML = '$' + hourlyRate.toFixed(2); document.getElementById('totalRevenueDisplay').innerHTML = '$' + Math.round(grossRevenueNeeded).toLocaleString(); document.getElementById('totalHoursDisplay').innerHTML = Math.round(totalBillableHours).toLocaleString() + ' hrs/year'; }

How to Calculate Your Freelance Rate

Setting the right hourly rate is one of the most challenging aspects of starting a freelance business. If you price yourself too low, you risk burnout and financial instability. If you price yourself too high without the portfolio to back it up, you may struggle to attract clients. This Freelance Hourly Rate Calculator uses a reverse-engineering approach to determine exactly what you need to charge based on your lifestyle and financial goals.

Understanding the Formula

Unlike a traditional salaried job, your freelance rate must cover three distinct buckets:

  • Your Salary: The actual take-home pay you need to live.
  • Overhead: Business costs like software subscriptions, health insurance, coworking spaces, and hardware.
  • Taxes: As a freelancer, you are responsible for the employer and employee portion of taxes (often adding up to 25-30%).

The calculation used above follows this logic: ((Desired Net Income + Annual Expenses) ÷ (1 – Tax Rate)) ÷ Total Billable Hours.

Billable vs. Non-Billable Hours

A common mistake new freelancers make is assuming they can bill 40 hours a week. In reality, you will spend substantial time on non-billable tasks such as:

  • Marketing and business development
  • Invoicing and accounting
  • Client communication and emails
  • Skill development

Most successful freelancers only bill between 20 to 30 hours per week. When using the calculator, be realistic about your Billable Hours Per Week input to ensure your rate covers your unbilled administrative time.

Why Vacation Time Matters

Salaried employees get paid time off; freelancers do not. If you plan to take 2 weeks of vacation and anticipate 1 week of sick time, you are only generating revenue for 49 weeks of the year. Your hourly rate must be high enough during those 49 weeks to subsidize the 3 weeks you aren't working. Always input at least 2-4 weeks in the "Weeks Off" field to create a financial buffer.

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