Determine exactly what you need to charge to meet your financial goals and cover business overhead.
Your required hourly rate is:
$0.00
How to Calculate Your Freelance Hourly Rate
Setting your freelance rate is one of the most critical business decisions you will make. Many new freelancers make the mistake of simply picking a number that "feels right" or copying a competitor. However, a sustainable rate must account for three specific factors: your lifestyle needs, your business overhead, and your unbillable time.
The Hidden Costs of Freelancing
When you are an employee, your employer pays for your health insurance, office space, computer, and half of your self-employment taxes. When you freelance, you are the employer. You must build these costs into your rate. If you want to take home $70,000, you actually need to generate significantly more in gross revenue to cover:
Self-Employment Taxes: Usually higher than standard income tax.
Software & Tools: Subscriptions like Adobe CC, Zoom, or accounting software.
Non-Billable Hours: Marketing, invoicing, and admin work usually take up 30-40% of your week.
Real-World Example Calculation
Let's look at a realistic scenario for a graphic designer:
Desired Salary: $75,000
Expenses: $10,000 (Insurance, Rent, Tech)
Tax Liability: 25%
Work Year: 48 weeks (allowing 4 weeks for vacation/sick days)
Billable Efficiency: 60% (24 billable hours in a 40-hour week)
In this case, the designer needs a gross revenue of roughly $113,333 to clear $75,000 after taxes and expenses. Dividing this by their 1,152 billable hours per year results in an hourly rate of approximately $98.38 per hour.
function calculateFreelanceRate() {
var targetIncome = parseFloat(document.getElementById('targetIncome').value);
var annualExpenses = parseFloat(document.getElementById('annualExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var vacationWeeks = parseFloat(document.getElementById('vacationWeeks').value);
var hoursPerWeek = parseFloat(document.getElementById('hoursPerWeek').value);
var utilizationRate = parseFloat(document.getElementById('utilizationRate').value);
// Validation
if (isNaN(targetIncome) || isNaN(annualExpenses) || isNaN(taxRate) || isNaN(vacationWeeks) || isNaN(hoursPerWeek) || isNaN(utilizationRate)) {
alert("Please enter valid numbers in all fields.");
return;
}
// 1. Calculate Gross Revenue Required (to cover taxes)
// Formula: Net Income = (Gross – Expenses) * (1 – TaxRate)
// Gross = (Net / (1 – TaxRate)) + Expenses
var taxDecimal = taxRate / 100;
var grossRequired = (targetIncome / (1 – taxDecimal)) + annualExpenses;
// 2. Calculate Billable Hours
var workingWeeks = 52 – vacationWeeks;
if (workingWeeks 0) {
hourlyRate = grossRequired / billableHours;
}
// Display results
var resultArea = document.getElementById('result-area');
var finalRateElement = document.getElementById('finalRate');
var breakdownElement = document.getElementById('breakdown-text');
resultArea.style.display = 'block';
finalRateElement.innerHTML = '$' + hourlyRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + ' per hour';
breakdownElement.innerHTML = "To reach your goal, you need to generate $" + grossRequired.toLocaleString(undefined, {maximumFractionDigits: 0}) + " in total annual revenue across " + billableHours.toLocaleString(undefined, {maximumFractionDigits: 0}) + " billable hours.";
// Scroll to result smoothly
resultArea.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}