Salary by Hourly Rate Calculator

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Freelance Hourly Rate Calculator

*Remember: You spend time on admin, sales, and marketing which isn't billable.

Your Freelance Financial Breakdown

Hourly Rate

$0.00

Annual Gross Revenue

$0.00

Total Overhead + Taxes

$0.00

function calculateFreelanceRate() { var desiredNet = parseFloat(document.getElementById("desiredNetIncome").value); var monthlyExp = parseFloat(document.getElementById("monthlyExpenses").value); var taxRate = parseFloat(document.getElementById("taxRate").value); var weeks = parseFloat(document.getElementById("billableWeeks").value); var hours = parseFloat(document.getElementById("billableHours").value); var resultDiv = document.getElementById("resultArea"); if (isNaN(desiredNet) || isNaN(monthlyExp) || isNaN(taxRate) || isNaN(weeks) || isNaN(hours) || hours <= 0 || weeks <= 0) { alert("Please fill in all fields with valid numbers."); return; } // Calculation Logic var annualExpenses = monthlyExp * 12; var taxableTarget = desiredNet + annualExpenses; // Reverse tax calculation: Gross = Net / (1 – TaxRate) var taxDecimal = taxRate / 100; var requiredGrossRevenue = taxableTarget / (1 – taxDecimal); var totalAnnualHours = weeks * hours; var hourlyRate = requiredGrossRevenue / totalAnnualHours; var totalTaxAndOverhead = requiredGrossRevenue – desiredNet; // Formatting document.getElementById("hourlyResult").innerHTML = "$" + hourlyRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById("grossResult").innerHTML = "$" + Math.round(requiredGrossRevenue).toLocaleString(); document.getElementById("overheadResult").innerHTML = "$" + Math.round(totalTaxAndOverhead).toLocaleString(); resultDiv.style.display = "block"; }

How to Calculate Your Freelance Hourly Rate

Transitioning from a salaried role to freelancing often leads to the biggest mistake in professional services: undercharging. Most new freelancers take their previous salary, divide it by 2,080 hours (the standard work year), and set that as their rate. This method fails to account for the reality of running a business.

The Hidden Costs of Freelancing

When you are self-employed, you are responsible for several costs that an employer previously covered:

  • Self-Employment Taxes: In most regions, you must pay both the employer and employee portion of social security and healthcare taxes.
  • Overhead: This includes your computer, software subscriptions (Adobe, Office, CRM), high-speed internet, and home office space.
  • The "Non-Billable" Gap: You cannot bill for 40 hours a week. A significant portion of your week is spent on invoicing, finding new clients, and administrative tasks.
  • Paid Time Off: If you don't work, you don't get paid. You must factor in sick days, vacation time, and public holidays.

Example Calculation

Let's look at a realistic scenario for a mid-level Graphic Designer:

  • Target Take-Home Pay: $70,000
  • Annual Expenses: $6,000 ($500/month)
  • Tax Rate: 25%
  • Billable Weeks: 48 (allowing 4 weeks for vacation/sick leave)
  • Billable Hours: 20 hours/week (the remaining 20 hours are for marketing and admin)

To net $70,000, this designer actually needs a gross revenue of roughly $101,333. Spreading that across 960 billable hours per year, the required hourly rate is $105.56 per hour.

Why the Billable Hour Matters

Even if you choose to move to "Value-Based Pricing" or "Project-Based Fees," knowing your internal hourly rate is vital. It acts as your floor. If a project takes 10 hours and your calculated rate is $100/hr, you cannot charge less than $1,000 without effectively taking a pay cut or paying out of pocket for your own business expenses.

Expert Tip: Review your rates every 12 months. As your expertise grows, you become more efficient, meaning you do more work in less time. If you don't raise your rates annually, you are essentially penalized for becoming better at your job.

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