Freelance Hourly Rate Calculator
Exclude admin and marketing time.
Your Minimum Hourly Rate:
How to Calculate Your Freelance Hourly Rate
Setting the right freelance rate is one of the most critical steps in building a sustainable business. Many new freelancers make the mistake of simply matching their previous "employee" hourly wage, forgetting that as a freelancer, you are responsible for your own taxes, insurance, equipment, and non-billable administrative time.
The "Bottom-Up" Calculation Method
This calculator uses the bottom-up approach, which ensures your business covers all costs while providing you with your desired lifestyle. The formula is:
(Desired Salary + Expenses) / (Billable Weeks × Billable Hours Per Week) = Hourly Rate
Key Factors to Consider
- Non-Billable Hours: Remember that you won't spend 40 hours a week on client work. You must account for invoicing, prospecting, and learning. Most freelancers average 20–30 billable hours per week.
- Business Expenses: Include software subscriptions (SaaS), hardware upgrades, health insurance, co-working space fees, and professional accounting services.
- The Tax Gap: Unlike employees, you pay the full portion of self-employment taxes. It is generally recommended to add 20-30% on top of your final result to cover tax liabilities.
- Profit Margin: Once you find your base rate, consider adding a 10-20% profit margin to allow your business to grow and handle unexpected downtime.
Example Scenario
If you want to earn a $80,000 salary with $10,000 in annual expenses, and you plan to work 25 billable hours per week for 48 weeks a year (allowing 4 weeks for vacation):
- Total Revenue Needed: $90,000
- Total Annual Billable Hours: 1,200 (25 hours × 48 weeks)
- Hourly Rate: $75.00/hour