Freelance Rate Calculator
The hourly rate you must charge to hit a target income, on billable hours only.
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Formula
How the calculation works
The rate a freelancer needs is set by the hours that can actually be billed, not by the hours worked. Wanting 60,000 of income with 8,000 of costs means 68,000 of revenue has to arrive. Across 25 billable hours in 46 weeks that is 1,150 hours, so the rate is 59.13 an hour.
The 46 weeks matter as much as the hours. Charging on 52 weeks assumes you work every week of the year with no holiday and no quiet period, and the rate then comes out lower than the income requires. Every week removed raises the rate, because the same revenue is spread over fewer billable hours.
Costs are added to the target rather than subtracted from the result. The income figure is what you want to keep, so software, equipment, insurance and any tax have to be covered on top of it. Leaving them out produces a rate that looks comfortable and leaves you short at the end of the year, which is the most common way a freelance business quietly loses money.
Common mistakes
- Setting the rate on 40 hours a week when only 20 or 25 can be billed, which halves the rate you actually need.
- Costing on 52 weeks, leaving no room for holidays or slow months.
- Treating the target income as revenue. Costs and tax come out of revenue first, so the rate has to be higher than the income alone implies.
When to use it
- Use it before quoting on a long project, when a per-hour rate has to cover a whole year of income rather than one piece of work.
- It gives a floor, not a market price. What a client will pay depends on the market and the work, and a rate above the floor is not automatically achievable.
Worked example
60,000 of income plus 8,000 of costs over 25 billable hours in 46 weeks needs 59.13 an hour.
Common questions
Why not count all my working hours?
Because not every hour is paid. Quoting, bookkeeping and quiet weeks are not billable. Counting them understates the rate, which is exactly how freelancers end up underpricing.
Why add costs on top?
The income you want is what you keep, but software, equipment and tax come out first. The rate has to cover them or the take-home falls short.
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