Freelance Hourly Rate Calculator
Minimum Hourly Rate Needed:
$0.00
Annual Breakdown:
Total Revenue Needed:
Total Billable Hours:
Total Revenue Needed:
Total Billable Hours:
How to Calculate Your Freelance Hourly Rate
Determining the right hourly rate is one of the biggest challenges for freelancers, consultants, and independent contractors. Unlike a salaried employee, your hourly rate must cover not just your take-home pay, but also your taxes, business expenses, and time off.
Understanding the Formula
This calculator uses a comprehensive approach to ensure you don't underprice your services. Here is the logic behind the numbers:
- Target Net Income: This is the "salary" you want to take home after all expenses and taxes are paid.
- Overhead & Expenses: Software subscriptions, internet, hardware, and marketing costs must be added to your revenue goals, not subtracted from your salary.
- Taxes: As a freelancer, you are responsible for the full tax burden (self-employment tax). A common rule of thumb is to set aside 25-30% of your profit.
- Billable Hours: You cannot bill for 40 hours a week. You need time for admin, sales, and professional development. Most successful freelancers bill between 20 and 30 hours per week.
The "Billable Efficiency" Trap
Many new freelancers make the mistake of dividing their desired salary by 2,080 (a standard 40-hour work year). This results in a rate that is far too low. You must account for unbillable time. If you spend 10 hours a week on emails and invoicing, you only have 30 hours left to earn revenue. Your rate must be higher to compensate for those non-billable hours.
Example Calculation
If you want to take home $60,000, have $5,000 in annual expenses, pay 25% in taxes, and take 4 weeks off per year working 25 billable hours a week:
- Total Revenue Needed: Approx $85,000 (to cover the net, taxes, and expenses).
- Total Billable Hours: 1,200 hours per year (48 weeks × 25 hours).
- Required Rate: ~$70.83 per hour.
Use the calculator above to adjust these variables to your specific situation and find your perfect rate.