Freelance Hourly Rate Calculator
Find the minimum hourly rate you must charge as a freelancer from your income goal, business expenses, taxes, and realistic billable hours. Runs in your browser.
Often only ~50–60% of work hours are billable (~1,000–1,400/yr full-time).
Required rate
- Pre-tax revenue needed
- $123,111.11
- Billable hours/year
- 1200
- Minimum hourly rate
- $102.59
- Suggested day rate (8h)
- $820.74
Rate = (take-home ÷ (1 − tax) + expenses) ÷ billable hours. The big lever is billable hours: of ~2,000 working hours a year, only part is billable (the rest is admin, sales, and downtime), so dividing by realistic billable hours — not total hours — is essential to not underprice. Set self-employment tax aside. Informational, not financial advice.
About this tool
New freelancers routinely underprice because they divide their old salary by 2,000 hours — ignoring taxes, business expenses, and the fact that most working hours are not billable. This calculator builds the rate up correctly. It starts from the take-home income you want, grosses it up for taxes (self-employed people pay both income and self-employment tax), adds your annual business expenses, and then divides by your realistic billable hours — not total hours worked — to get the minimum rate you must charge to hit your goal. The billable-hours input is the crucial one: out of roughly 2,000 working hours a year, a large share goes to admin, sales, marketing, and downtime, so full-time freelancers often bill only 1,000–1,400 hours. Dividing by that smaller number is what separates a sustainable rate from one that quietly loses money. The tool also suggests a day rate. Treat the result as your floor, not your ceiling — value-based pricing can go higher. It is informational, not financial advice. Everything runs in your browser.
How to use it
- Enter the take-home income you want to earn.
- Add your annual business expenses and effective tax rate.
- Enter realistic billable hours per year (not total hours worked).
- Read the minimum hourly and day rate — treat it as your floor.
Frequently asked questions
- Why can't I just divide my salary by 2,080 hours?
- Because that ignores three things freelancers must cover themselves: taxes (including self-employment tax), business expenses, and non-billable time. Properly, you gross up for tax, add expenses, and divide by billable hours — which yields a much higher rate than the naive salary/2080.
- What counts as billable hours?
- Only the hours you can actually invoice a client for. Admin, sales calls, marketing, learning, and downtime are not billable. Full-time freelancers typically bill 50–70% of working hours — roughly 1,000–1,400 a year — so use a realistic figure, not 2,000.
- How do taxes factor in?
- Self-employed workers owe income tax plus self-employment tax (Social Security and Medicare, ~15.3% in the US) with no employer withholding. The tool grosses your take-home target up by your effective rate so the rate you charge actually nets your goal after tax.
- Should I charge more than this minimum?
- Often yes. This is the floor that meets your income goal at your assumed hours. Value-based pricing (charging for the outcome, not the hour), scarcity, and expertise can support higher rates. Never go below the floor, though.
- What expenses should I include?
- Software, hardware, insurance, accounting, subscriptions, home-office costs, equipment, professional development — anything you spend to run the business. These come out of revenue before your take-home pay, so the rate must cover them.
- Is this financial advice?
- No. It is an informational pricing floor. Consult an accountant for tax specifics and a fuller business budget.