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Freelance hourly rate calculator

Start from the take-home pay you want, add your business costs and tax, take out holidays and the hours you cannot bill, and see the hourly and day rate that gets you there.

After tax and business costs.

Software, equipment, insurance, accountant, workspace.

Of profit.

Holidays, sick days, gaps.

Time you can charge for.

Hourly rate$66.77Round up to $67.00 an hour, or $534.16 a day
Take-home pay$60,000.00
Tax set aside25% of profit$20,000.00
Business costs$6,000.00
Revenue to bill a year$86,000.00
Billable hours a year46 weeks × 40 h × 70% billable1,288
Day rate (8 hours)$534.16
Monthly billing target$7,166.67

Rate = (take-home ÷ (1 − tax share) + costs) ÷ billable hours. Hours you spend on sales and admin are not billable, so they are left out.

Invoice at this rate

How to use the hourly rate calculator

  1. Pick your currency and enter the take-home pay you want a year.
  2. Add your yearly business costs and the share of profit to set aside for tax.
  3. Enter weeks off, hours a week and the share of hours you can bill.
  4. Read the hourly rate, the day rate and the yearly revenue target.

The formula

Revenue needed = take-home pay ÷ (1 − tax share) + business costs. Billable hours = (52 − weeks off) × hours a week × billable share. Hourly rate = revenue needed ÷ billable hours.

With the defaults: $60,000 ÷ 0.75 = $80,000, plus $6,000 costs = $86,000. Billable hours = 46 × 40 × 70% = 1,288. Rate = $86,000 ÷ 1,288 = $66.77, so charge at least $67 an hour, or $534 a day.

Checking your rate

  • Compare with what clients pay for similar work in your market; a rate far below it signals inexperience, not value.
  • Round up, and review it every year as costs and experience grow.
  • Fixed-price quotes still need an hourly rate underneath: estimate the hours, add contingency, multiply.
  • Tax set-aside is a rough share of profit; your accountant can give a better figure for your country.

Questions

How do I calculate my freelance hourly rate?

Work out the revenue you need (take-home pay grossed up for tax, plus business costs) and divide it by the hours you can actually bill in a year. $60,000 take-home at 25% tax and $6,000 of costs needs $86,000 of revenue; over 1,288 billable hours that is $66.77 an hour.

Why is the rate so much higher than my old salary per hour?

An employer pays for holidays, sick days, equipment, pension and the hours you spend on admin. As a freelancer you pay for all of that from what you bill, and only part of your working week is billable.

What billable share should I use?

Many freelancers bill 60–75% of their working hours. The rest goes on finding work, admin, invoicing and learning. If you are just starting out, assume less.

How is the day rate worked out?

It is the hourly rate × 8 hours. If your clients expect a 7.5-hour day, multiply by 7.5 instead.

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