body {
font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif;
line-height: 1.6;
color: #333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
}
.calculator-container {
background-color: #f8f9fa;
border: 1px solid #e9ecef;
border-radius: 8px;
padding: 30px;
margin-bottom: 40px;
box-shadow: 0 4px 6px rgba(0,0,0,0.05);
}
.calc-header {
text-align: center;
margin-bottom: 25px;
}
.calc-header h2 {
margin: 0;
color: #2c3e50;
}
.form-group {
margin-bottom: 20px;
}
.form-group label {
display: block;
margin-bottom: 8px;
font-weight: 600;
color: #495057;
}
.input-wrapper {
position: relative;
}
.input-wrapper input {
width: 100%;
padding: 12px;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 16px;
box-sizing: border-box;
}
.input-prefix, .input-suffix {
position: absolute;
top: 50%;
transform: translateY(-50%);
color: #6c757d;
font-weight: bold;
}
.input-prefix { left: 12px; }
.input-suffix { right: 12px; }
.input-with-prefix { padding-left: 30px !important; }
.input-with-suffix { padding-right: 30px !important; }
button.calc-btn {
width: 100%;
background-color: #007bff;
color: white;
border: none;
padding: 15px;
font-size: 18px;
font-weight: bold;
border-radius: 4px;
cursor: pointer;
transition: background-color 0.2s;
}
button.calc-btn:hover {
background-color: #0056b3;
}
.results-area {
margin-top: 30px;
background-color: #ffffff;
border: 1px solid #dee2e6;
border-radius: 6px;
padding: 20px;
display: none;
}
.result-row {
display: flex;
justify-content: space-between;
align-items: center;
padding: 10px 0;
border-bottom: 1px solid #eee;
}
.result-row:last-child {
border-bottom: none;
}
.result-label {
font-size: 16px;
color: #666;
}
.result-value {
font-size: 20px;
font-weight: bold;
color: #2c3e50;
}
.highlight-result {
background-color: #e8f4fd;
padding: 15px;
border-radius: 6px;
margin-top: 10px;
text-align: center;
}
.highlight-result .result-label {
display: block;
margin-bottom: 5px;
color: #007bff;
font-weight: bold;
}
.highlight-result .result-value {
font-size: 32px;
color: #007bff;
}
.article-content h2 {
margin-top: 40px;
color: #2c3e50;
border-bottom: 2px solid #eee;
padding-bottom: 10px;
}
.article-content h3 {
margin-top: 30px;
color: #34495e;
}
.article-content ul {
margin-bottom: 20px;
}
.article-content li {
margin-bottom: 10px;
}
.info-box {
background-color: #fff3cd;
border: 1px solid #ffeeba;
padding: 15px;
border-radius: 4px;
margin: 20px 0;
color: #856404;
}
How to Calculate Your Self-Employed Hourly Rate
Transitioning from a salaried position to self-employment requires a fundamental shift in how you view your income. One of the most common mistakes new freelancers and contractors make is basing their hourly rate on their previous salary. However, a $50/hour employee costs a company significantly more than $50/hour due to benefits, taxes, and overhead. As a self-employed individual, you must cover all these costs yourself.
Pro Tip: Your "Billable Hours" are rarely 40 hours a week. Administrative tasks, marketing, invoicing, and professional development are unbillable but necessary. Most successful freelancers bill between 20 to 30 hours per week.
The 3-Step Formula for Setting Your Rate
1. Determine Your Target Net Income
This is the amount of money you want to take home after all expenses and taxes are paid. This should be comparable to the "take-home" pay of a salary, plus extra to compensate for the lack of employer benefits like health insurance, 401k matching, and paid leave.
2. Calculate Your "Real" Costs
Unlike an employee, you have two major cost categories to account for:
- Business Overheads: Software subscriptions (Adobe, Office, Accounting), hardware, internet, co-working space fees, professional insurance, and marketing costs.
- Self-Employment Taxes: You are responsible for both the employer and employee portion of certain taxes. In many jurisdictions, you should estimate setting aside 25-35% of your gross income for taxes.
3. Estimate Billable Capacity
The denominator in the equation is your time. However, you cannot calculate based on 52 weeks a year at 40 hours a week.
- Time Off: Subtract weeks for holidays, planned vacations, and potential sick days.
- Utilization Rate: This is the percentage of time spent on work you can invoice. If you work 40 hours but spend 10 hours looking for clients and doing accounting, your utilization rate is 75%.
Why This Calculator is Essential
This calculator performs a "reverse engineering" of your finances. Instead of guessing a rate and hoping it covers your bills, it starts with your financial goals and works backward. The logic used is:
(Target Net Income + Expenses) / (1 – Tax Rate) = Gross Revenue Needed
Gross Revenue Needed / (Billable Hours × Working Weeks) = Hourly Rate
Adjusting for Market Value
Once you calculate your minimum rate using the tool above, compare it to market averages. If the calculated rate is significantly higher than the market rate, you may need to reduce expenses or increase billable hours. If your calculated minimum is lower than the market rate, you have the opportunity to charge market rates and increase your profit margin.
function calculateHourlyRate() {
// 1. Get Input Values
var targetIncome = parseFloat(document.getElementById('targetIncome').value);
var annualExpenses = parseFloat(document.getElementById('annualExpenses').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
var billableHours = parseFloat(document.getElementById('billableHours').value);
var weeksOff = parseFloat(document.getElementById('weeksOff').value);
// 2. Validate Inputs
if (isNaN(targetIncome) || targetIncome < 0) {
alert("Please enter a valid target annual income.");
return;
}
if (isNaN(annualExpenses) || annualExpenses < 0) {
annualExpenses = 0; // Default to 0 if empty
}
if (isNaN(taxRate) || taxRate = 100) {
alert("Please enter a valid tax rate percentage (0-99).");
return;
}
if (isNaN(billableHours) || billableHours 168) {
alert("Please enter valid billable hours per week.");
return;
}
if (isNaN(weeksOff) || weeksOff 52) {
alert("Please enter valid weeks off per year.");
return;
}
// 3. Perform Calculations
// Calculate Working Weeks
var workingWeeks = 52 – weeksOff;
if (workingWeeks <= 0) {
alert("Weeks off cannot equal or exceed 52 weeks.");
return;
}
// Calculate Total Billable Hours per Year
var totalBillableHours = workingWeeks * billableHours;
// Calculate Gross Revenue Needed
// Formula: Net = Gross – Taxes – Expenses
// Therefore: Gross – Taxes = Net + Expenses
// Taxes = Gross * (TaxRate/100)
// Gross – (Gross * Rate) = Net + Expenses
// Gross * (1 – Rate) = Net + Expenses
// Gross = (Net + Expenses) / (1 – Rate)
var taxDecimal = taxRate / 100;
var grossRevenueNeeded = (targetIncome + annualExpenses) / (1 – taxDecimal);
// Calculate Hourly Rate
var hourlyRate = grossRevenueNeeded / totalBillableHours;
// 4. Update DOM with Results
// Helper to format currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('hourlyRateResult').innerHTML = formatter.format(hourlyRate);
document.getElementById('workingWeeksResult').innerHTML = workingWeeks + " weeks";
document.getElementById('totalHoursResult').innerHTML = totalBillableHours.toLocaleString() + " hours";
document.getElementById('grossRevenueResult').innerHTML = formatter.format(grossRevenueNeeded);
// Show results area
document.getElementById('resultsArea').style.display = "block";
}