Freelance Hourly Rate Calculator
Enter your desired income, business expenses, tax rate, and the number of hours you plan to bill each week. The calculator works backwards from what you actually need to keep — accounting for taxes and overheads — to show you the minimum hourly rate you must charge, plus a recommended rate with your chosen profit margin buffer.
Recommended Hourly Rate
$85.00/hr
Base rate before your 15% buffer: $73.91/hr
Day rate (8 hrs)
$680
Monthly revenue target
$7,083
Annual breakdown
| Category | Amount |
|---|---|
| Income | $60,000 |
| Expenses | $5,000 |
| Taxes | $20,000 |
How it works
Your required annual revenue is not just your take-home income. The calculator first grosses up your desired income to cover your tax liability (dividing by one minus the tax rate), then adds your business expenses on top. This means if you want $60k after a 30% tax rate, you actually need to bill around $95,700 before expenses — the formula makes that invisible maths explicit.
Total billable hours is your weekly billable target multiplied by your working weeks per year — not your total hours worked. In practice, freelancers typically spend only 50–60% of their time on billable client work; the rest goes to admin, sales, and professional development. The hours you enter here should already account for that reality, not assume 40 billable hours every week.
The profit margin buffer is applied on top of your base rate as a multiplier. A 15% margin means your recommended rate is 15% above the minimum you need to break even. This buffer absorbs scope creep, unexpected expenses, slow months, and provides capital to reinvest in your business — without it, any unforeseen cost comes directly out of your income.
Frequently asked questions
How many billable hours per week are realistic?+
Industry rule of thumb is that freelancers can realistically bill 50–60% of their working time. For a 40-hour week that is 20–24 hours. The rest goes to invoicing, sales, client communication, learning, and admin. Beginners often overestimate billable hours and end up under-earning — start conservatively and adjust upward once you have a few months of real data.
Why is my required rate so much higher than my old salary ÷ 2080?+
As an employee your employer paid a share of payroll taxes, funded your benefits, covered equipment and software costs, and absorbed slow periods. As a freelancer every one of those costs comes out of your gross revenue. You also have no guaranteed 52 weeks of billing, so unpaid holidays, sick days, and client gaps must be factored in — this calculator lets you model all of that explicitly through the expense and work-weeks fields.
Should I include retirement and health insurance?+
Yes — include them in the annualBusinessExpenses field. These are real costs of self-employment that employees often take for granted. A rough guide: budget 10–15% of target income for retirement contributions and research market-rate health insurance premiums for your situation. Because tax treatment of these deductions varies by country and entity type, it is worth seeking professional guidance from an accountant who works with freelancers.