Free tool
Freelance hourly rate calculator
Use this free freelance hourly rate calculator to turn your income goal, expenses, taxes and billable hours into an hourly rate you can quote with confidence.
Updated · By PayToMe Editorial
Result
Calculated in your browser. Nothing is sent anywhere.
Read the full guide: how to use it, what to include, worked example
A freelance hourly rate calculator tells you the minimum you should charge per hour to hit your income goal after expenses, taxes and unpaid time. Fill in the fields above, which are prefilled with an example, and the rate recalculates live. It runs in your browser, and nothing you enter is uploaded.
How to use the calculator
- Set your target income. This is what you want to take home before tax in a normal year, such as $80,000.
- Add yearly business expenses. Software, insurance, equipment, coworking, accounting and similar costs.
- Enter your tax rate. An honest estimate of the share of your earnings that goes to tax.
- Estimate billable hours per week. Count only hours you can invoice, not hours you work.
- Subtract weeks off. Vacations, holidays, sick days and slow periods.
- Choose a profit margin. A buffer on top, such as 10%.
- Read the hourly rate. It appears with the billable hours per year and the revenue you need.
How the math works
The calculation runs in four steps.
- Billable hours a year. Take the weeks you work (52 minus weeks off) and multiply by billable hours per week.
- Gross up for tax. Divide target income by 1 minus the tax rate. This is the pre-tax income needed to keep your target.
- Add expenses and margin. Add yearly expenses, then multiply by 1 plus the profit margin. This is the revenue you need.
- Divide. Required revenue divided by billable hours gives the hourly rate.
Worked example
Notice how far the rate sits from a naive guess. Dividing $80,000 by 2,080 working hours (a full-time year) gives about $38 an hour. The gap comes from unpaid time, taxes, costs and margin, which is why many first-time freelancers undercharge.
| Step | Amount |
|---|---|
| Billable hours a year | 1,150 |
| Target income grossed up for 25% tax | $106,666.67 |
| Plus expenses | $118,666.67 |
| Plus 10% margin (required revenue) | about $130,533 |
| Hourly rate | $113.51 |
What changes the rate most
Try changing one field at a time in the calculator.
- Billable hours. Fewer billable hours means a higher rate. Dropping from 25 to 20 hours a week raises the rate sharply, because the same revenue is spread across fewer hours.
- Tax rate. Every extra percentage point increases the amount you must earn before tax.
- Weeks off. Taking real vacations lowers billable hours, so build them in rather than hoping to skip them.
- Expenses. Review them yearly. Fixed costs are paid whether or not you have work.
Common mistakes
- Counting all working hours as billable. Admin, pitching and bookkeeping are real work that no client pays for directly.
- Ignoring tax. Your goal should be what you keep, not what you earn.
- Forgetting unpaid weeks. Holidays, illness and gaps between projects reduce billable time.
- Leaving out expenses. Software, equipment and insurance add up.
- Skipping the margin. Without a buffer, one slow month can wipe out the plan.
- Treating the number as fixed. Charge more for urgent work, rare skills or clients with heavy revision cycles.
- Never raising rates. Revisit the calculation at least once a year as costs and goals change.
From rate to invoice
Once you have your hourly rate, use it consistently. On an invoice, list hours and rate as separate columns so the client can see the math, and confirm the terms in writing before work begins. If you charge sales tax or VAT on services, the sales tax calculator shows how it is added or removed. For a walkthrough of billing as a solo professional, read how to invoice as a freelancer, and see the glossary entry on time and materials for the billing model that pairs naturally with an hourly rate. You can make a branded invoice today with the free invoice generator.