How is a freelance hourly rate calculated?

It typically starts from your target annual income, adds business expenses and taxes, then divides by your realistic billable hours per year (accounting for non-billable time like admin and marketing).

Why is freelance billable time usually less than total working hours?

Freelancers spend time on unpaid tasks like client acquisition, invoicing, and administration, so only a portion of total work hours are actually billable to clients.

Should freelance rates include costs employees don't pay?

Yes — freelancers typically cover their own health insurance, retirement savings, and self-employment tax, all of which should be factored into a sustainable hourly rate.

Freelance Hourly Rate Calculator

Work out exactly what to charge per hour to hit your income goal after taxes and expenses.

Desired Annual Net Income ($)

Annual Business Expenses ($)

Estimated Tax Rate (%)

Billable Hours per Week

Working Weeks per Year

Total Billable Hours / Year -

Gross Revenue Needed -

Hourly Rate to Charge -

Equivalent Day Rate (8h) -

What Is the Freelance Hourly Rate Calculator?

The Freelance Hourly Rate Calculator helps independent contractors and consultants work backward from a target take-home income to a real hourly rate, factoring in taxes, business expenses, and the fact that not every hour in a week is billable.

Formula Used

Rate = (Net Income + Expenses) ÷ (1 − Tax Rate) ÷ Billable Hours per Year

Billable hours per year are your weekly billable hours multiplied by the number of weeks you actually work (after subtracting holidays and admin time).

How to Use This Calculator

Enter the annual take-home (net) income you want to earn.
Enter your yearly business expenses (software, insurance, equipment, etc.).
Enter your estimated tax rate as a percentage.
Enter how many hours per week you can realistically bill clients.
Enter how many weeks per year you plan to work, then click Calculate.

Worked Example

A freelancer wants $60,000 net income, has $6,000 in expenses, pays 25% tax, bills 25 hours a week for 48 weeks a year. That's 1,200 billable hours. Gross revenue needed is ($60,000 + $6,000) ÷ 0.75 = $88,000, so the hourly rate should be about $73.33/hour.