Freelance Hourly Rate Calculator

Freelance hourly rate must cover more than just your desired salary. Unlike employees, freelancers pay their own taxes, cover business expenses, and do not bill for every hour they work. This calculator determines the minimum hourly rate needed to hit your income goals.

Formula:

Gross Revenue Needed = (Desired Income + Business Expenses) / (1 - Tax Rate)

Hourly Rate = Gross Revenue Needed / (Billable Hours per Week × Working Weeks per Year)

What each variable means:

• Desired Annual Income is your target take-home pay after taxes and expenses.
• Annual Business Expenses covers everything it costs to run the business: software, insurance, equipment, office or coworking space, website hosting, and professional development.
• Tax Rate is your combined federal, state, and self-employment rate. In the US, self-employment tax alone is 15.3%, which is the part newcomers forget because an employer used to pay half of it.
• Billable Hours per Week is how many hours you can actually invoice. Freelancers typically bill only 60–70% of their working time; the rest goes to admin, marketing, invoicing, and chasing the next client. If you plan a 40-hour week, 25 billable hours is a realistic target and 35 is optimistic.
• Working Weeks per Year is the total you plan to work. Subtract vacation, holidays, and the weeks you will lose to being ill, because you have no sick pay now.

Practical example: You want $80,000 take-home, have $10,000 in expenses, a 25% tax rate, 25 billable hours per week, and 48 working weeks per year. Gross revenue needed = ($80,000 + $10,000) / 0.75 = $120,000. Billable hours per year = 25 × 48 = 1,200. Hourly rate = $120,000 / 1,200 = $100/hour.

When to use this calculator: Use it when starting out as a freelancer, raising your rates, or evaluating whether a project is worth taking at the offered rate.

Tips: Most new freelancers charge too little because they compare to employee salaries without accounting for taxes and expenses. As a general rule, your freelance rate should be roughly 2–3 times what you would earn per hour as an employee doing similar work. Consider offering day rates (hourly × 8) or project-based pricing for larger jobs, which can be more profitable.