The amount you want in your pocket after taxes and expenses.
$
Software, hardware, office rent, insurance, marketing, etc.
%
Combined state and federal income tax estimate.
Hours actually charged to clients (exclude admin/marketing time).
Vacation, sick days, and holidays.
Minimum Hourly Rate:$0.00
Gross Revenue Needed:$0.00
Total Billable Hours/Year:0
How to Calculate Your Freelance Hourly Rate
Determining the right hourly rate is one of the most critical challenges for freelancers, consultants, and independent contractors. Unlike a salaried employee, your rate must cover not just your desired take-home pay, but also your business expenses, taxes, and non-billable time. This Freelance Hourly Rate Calculator helps you reverse-engineer your rate based on your real-world financial goals.
Why You Can't Just Divide Your Salary by 2,080
A standard full-time job involves roughly 2,080 working hours per year (40 hours x 52 weeks). However, freelancers rarely bill 40 hours a week. A significant portion of your time goes into:
Marketing & Sales: Finding new clients and pitching.
Administration: Invoicing, bookkeeping, and emails.
Skill Development: Learning new tools or trends.
If you bill for only 20 or 25 hours a week but price yourself as if you were billing 40, you will significantly under-earn. This calculator adjusts for your actual billable utilization.
The Math Behind the Calculation
Our tool uses a "bottom-up" approach to calculate your minimum viable rate:
Adjust for Taxes: We first calculate the pre-tax income needed to hit your "Target Net Income" goal based on your estimated tax rate.
Add Expenses: Business overhead (software, health insurance, equipment) is added to the pre-tax income to find your Total Required Revenue.
Calculate Capacity: We determine your total billable hours per year by subtracting weeks off (vacation/sick) from 52 weeks, then multiplying by your weekly billable hours.
Final Division: Total Required Revenue divided by Total Billable Hours equals your Minimum Hourly Rate.
Example Calculation
Let's say you want to take home $60,000 per year.
Expenses: You spend $5,000/year on software and home office costs.
Taxes: You estimate a 25% tax rate.
Workload: You plan to bill 25 hours/week and take 4 weeks off.
First, to net $60k after 25% taxes, you need $80,000 in taxable income ($60,000 / 0.75).
Add your $5,000 expenses, and your business must gross $85,000.
Your total working weeks are 48 (52 – 4). At 25 hours/week, that is 1,200 billable hours/year. Rate: $85,000 / 1,200 hours = $70.83 per hour.
Tips for Setting Your Rate
Once you have your base number from this calculator, consider these factors before sending a quote:
Market Demand: Is your calculated rate competitive within your specific niche?
Value Pricing: Can you charge based on the value delivered rather than just the time spent?
Buffer: It is often wise to add a 10-20% margin to your calculated rate to account for lean months or unexpected expenses.
function calculateRate() {
// 1. Get Input Values
var desiredNet = parseFloat(document.getElementById('desiredNetIncome').value);
var expenses = parseFloat(document.getElementById('annualExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var weeklyHours = parseFloat(document.getElementById('billableHours').value);
var weeksOff = parseFloat(document.getElementById('weeksOff').value);
// 2. Validate Inputs
if (isNaN(desiredNet) || isNaN(expenses) || isNaN(taxRate) || isNaN(weeklyHours) || isNaN(weeksOff)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (weeklyHours 168) {
alert("Please enter a realistic number of billable hours per week.");
return;
}
if (weeksOff 52) {
alert("Please enter a valid number of weeks off (0-52).");
return;
}
// 3. Perform Calculations
// Step A: Calculate Gross Revenue Needed
// Formula: TaxableIncome = Net / (1 – TaxRate)
// Revenue = TaxableIncome + Expenses
// Note: Tax rate is entered as percentage (e.g., 25), convert to decimal (0.25)
var taxDecimal = taxRate / 100;
// Prevent division by zero if tax is 100% (unlikely but safe coding)
if (taxDecimal >= 1) {
alert("Tax rate must be less than 100%.");
return;
}
var taxableIncomeNeeded = desiredNet / (1 – taxDecimal);
var grossRevenueNeeded = taxableIncomeNeeded + expenses;
// Step B: Calculate Total Billable Hours
var workingWeeks = 52 – weeksOff;
var totalBillableHours = workingWeeks * weeklyHours;
// Step C: Calculate Hourly Rate
var hourlyRate = 0;
if (totalBillableHours > 0) {
hourlyRate = grossRevenueNeeded / totalBillableHours;
} else {
alert("Total billable hours cannot be zero.");
return;
}
// 4. Update UI
document.getElementById('hourlyRateResult').innerText = '$' + hourlyRate.toFixed(2);
document.getElementById('grossRevenueResult').innerText = '$' + grossRevenueNeeded.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalHoursResult').innerText = totalBillableHours.toLocaleString('en-US');
// Show result container
document.getElementById('result-container').style.display = 'block';
}