Freelance hourly rate calculator

What is the Freelance Hourly Rate Calculator?

Many freelancers set their hourly rate by guessing or copying what others charge, without actually working out whether that rate covers their expenses, taxes, and time off, and still leaves the income they need. This calculator works backward from your income goal to a concrete hourly rate, accounting for the reality that not every working hour is billable to a client.

How to use it

1. Enter your desired annual take-home income, what you actually want to keep after expenses and taxes.
2. Enter your estimated annual business expenses and a rough tax rate.
3. Enter how many weeks, days, and hours you plan to work.
4. Enter your billable percentage, realistically, how much of your working time is spent on paid client work versus admin, marketing, and finding clients.
5. Click Calculate my rate to see your suggested hourly rate, day rate, and weekly and monthly revenue targets.

Why billable percentage matters so much

This is the number freelancers most often underestimate. Running a freelance business involves plenty of unpaid time: writing proposals, invoicing, marketing, learning new skills, and general admin. If you assume 100% of your hours are billable, your rate will be set too low, and you'll fall short of your income goal even while working full days. Most freelancers find somewhere between 50% and 80% of their total working time actually ends up billable to clients, the rest is the overhead of running a business.

How the calculation works

The calculator works backward in three steps. First, it grosses up your desired take-home income by your tax rate to find the pre-tax profit needed. Second, it adds your business expenses on top, since revenue has to cover both taxes and running costs before what's left becomes your take-home income. Third, it divides that total revenue target by your billable hours per year (not your total working hours) to arrive at the hourly rate that actually gets you there.

Using the day, weekly, and monthly targets

The day rate is useful for quoting fixed-price day-long engagements instead of hourly billing. The weekly and monthly targets give you a concrete revenue number to track against as you go, if you're consistently falling short of the monthly target, it's an early signal to either raise your rate, find more clients, or reduce your non-billable time.

Common uses

• Setting a starting hourly rate as a new freelancer
• Checking whether a current rate is actually sustainable given real expenses and non-billable time
• Deciding how a rate needs to change if take-home goals or expenses shift
• Comparing freelancing income potential against a salaried job offer
• Setting realistic weekly or monthly revenue targets to track progress against

Frequently asked questions

Should I use my target take-home pay or my current salary as a benchmark?

Either works as a starting point, but remember that as a freelancer you're also covering costs a traditional employer would otherwise pay for, like benefits, equipment, and paid time off, so many freelancers aim somewhat higher than their previous salary to account for this.

What's a realistic billable percentage to use?

It varies by freelancer and field, but many experienced freelancers report somewhere between 60-75% as a sustainable target once their business is established, newer freelancers spending more time on marketing and client acquisition often see a lower percentage.

Does this account for client negotiations or market rates?

No, this calculates what you need to charge to hit your financial goals, not what the market will necessarily bear. Use this as your floor, the minimum you'd need, and compare it against what similar freelancers in your field and region typically charge.

Should I include health insurance or retirement savings in my expenses?

Yes, if you're paying for these yourself as a freelancer, include them as business expenses (or add them to your desired take-home income), since an employer would typically otherwise cover part of these costs.