function calculateFreelanceRate() {
var targetNet = parseFloat(document.getElementById('targetIncome').value);
var expenses = parseFloat(document.getElementById('businessExpenses').value);
var taxPercentage = parseFloat(document.getElementById('taxRate').value);
var weeks = parseFloat(document.getElementById('billableWeeks').value);
var hours = parseFloat(document.getElementById('billableHours').value);
var resultDiv = document.getElementById('rateResult');
var display = document.getElementById('finalRateDisplay');
var breakdown = document.getElementById('rateBreakdown');
if (isNaN(targetNet) || isNaN(expenses) || isNaN(taxPercentage) || isNaN(weeks) || isNaN(hours) || weeks <= 0 || hours <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
// Calculation Logic
// 1. Gross income needed before taxes to reach Net Income: Gross = Net / (1 – (TaxRate/100))
var taxDecimal = taxPercentage / 100;
var grossNeededForNet = targetNet / (1 – taxDecimal);
// 2. Add expenses (expenses are usually pre-tax deductions, but we need to earn them on top of net)
var totalAnnualRevenueRequired = grossNeededForNet + expenses;
// 3. Total billable hours per year
var totalAnnualHours = weeks * hours;
// 4. Final Hourly Rate
var hourlyRate = totalAnnualRevenueRequired / totalAnnualHours;
display.innerHTML = "$" + hourlyRate.toFixed(2);
breakdown.innerHTML = "To take home $" + targetNet.toLocaleString() + " after taxes, you need a gross annual revenue of approximately $" + Math.round(totalAnnualRevenueRequired).toLocaleString() + " spread across " + totalAnnualHours + " billable hours.";
resultDiv.style.display = 'block';
}
How to Calculate Your Freelance Hourly Rate
Transitioning from a salaried position to freelancing often leads to the "Salary Trap"—the mistake of simply dividing your former salary by 2,000 hours. This fails to account for the overhead, taxes, and non-billable time that every independent professional faces.
The Hidden Costs of Freelancing
When you work for yourself, you are both the employer and the employee. This means you are responsible for costs that companies usually cover, including:
Self-Employment Tax: You must cover the full portion of Social Security and Medicare.
Health Insurance: Premiums can range from $400 to $1,200+ per month depending on your location and family size.
Software & Tools: Adobe Creative Cloud, CRM systems, hosting, and project management tools add up quickly.
Non-Billable Time: You cannot bill for time spent on invoicing, marketing, or prospecting for new clients.
Understanding Billable vs. Working Hours
A common mistake is assuming a 40-hour billable week. In reality, most freelancers spend 25–30% of their time on administration. If you work 40 hours total, you might only have 25 hours of "billable" time to charge to clients. Our calculator uses Billable Hours to ensure your rate covers the time you spend working "on" your business, not just "in" it.
The Calculation Formula
To find your rate manually, follow this expert formula:
Rate = [(Desired Net Income / (1 - Tax Rate)) + Operating Expenses] / (Weeks Worked × Billable Hours Per Week)
Realistic Example
Imagine you want to take home $70,000 per year. You estimate your taxes at 25% and your expenses (health insurance, laptop, coworking space) at $12,000. You want 4 weeks of vacation (48 working weeks) and can realistically bill 20 hours per week.
Pre-tax Income needed: $70,000 / 0.75 = $93,333
Total Revenue needed: $93,333 + $12,000 = $105,333