Freelance Hourly Rate Calculator
How to Calculate Your Freelance Hourly Rate
Transitioning from a salaried role to freelancing requires a fundamental shift in how you view your time. You are no longer just an employee; you are a business owner. This calculator helps you determine the rate you need to charge to sustain your lifestyle, cover business overhead, and account for the "hidden" costs of being self-employed.
1. Account for Non-Billable Time
A common mistake is assuming a 40-hour work week. In reality, freelancers spend significant time on marketing, invoicing, and administrative tasks. Most successful freelancers aim for 20 to 25 billable hours per week. If you base your rate on 40 hours, you will likely fall short of your income goals.
2. The Reality of Taxes and Benefits
When you are employed, your employer typically pays a portion of your payroll taxes and provides benefits like health insurance and 401k matching. As a freelancer, you are responsible for the full 100% of these costs. This is why our calculator includes an estimated tax rate and business expense field.
3. Real-World Example
- Target Take-Home: $60,000
- Expenses: $5,000 (Adobe Suite, Laptop, Office Space)
- Taxes (25%): $16,250
- Working Weeks: 48 (4 weeks vacation/sick time)
- Billable Hours: 25 per week (1,200 hours per year)
In this scenario, you need to generate roughly $81,250 in total revenue. Dividing this by 1,200 billable hours results in an hourly rate of approximately $67.70.
4. Adjusting for Profit and Growth
The result from this calculator represents your "break-even" rate to live comfortably and pay your bills. To grow your business or build a significant emergency fund, consider adding a 10-20% "profit margin" on top of the calculated rate.