Freelance Rate Calculator

Set the right hourly rate for your freelance business. Factor in your target income, business expenses, and billable hours to ensure profitability.

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Calculator

Target Annual Income ($)

Annual Business Expenses ($)

Billable Hours Per Year

Required Hourly Rate

$63.33

Annual Revenue Needed

$95,000.00

Monthly Target

$7,916.67

How It Works

Setting the right freelance rate is critical for business success. Charge too little and you'll struggle to cover expenses and make a living. Charge too much and you may struggle to find clients.

Your rate needs to cover not just your desired income but also business expenses, taxes, health insurance, retirement savings, paid time off, and periods without clients.

A good rule of thumb is that your freelance rate should be 2-3 times what you'd earn as an employee to account for these additional costs and risks.

The Formula

Required Hourly Rate = (Target Annual Income + Annual Expenses) / Billable Hours Per Year

Target Annual Income = your desired take-home pay. Annual Expenses = business costs (software, insurance, marketing, home office). Billable Hours = hours you can invoice clients per year.

Example

Scenario: You want $80,000 in personal income, have $15,000 in annual business expenses, and can bill 1,500 hours per year.

Result: You need to charge $63.33 per hour. Your annual revenue needed is $95,000, and monthly target is $7,917.

Comparison: As an employee earning $80,000, your hourly equivalent is about $38.46. Your freelance rate needs to be 65% higher to cover expenses and risks.

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Frequently Asked Questions

What expenses should freelancers include?

Include software subscriptions, hardware, home office costs, internet, phone, insurance (health, liability), marketing, professional development, accounting/legal fees, and taxes.

How many billable hours can a freelancer expect?

Full-time freelancers typically bill 1,200-1,600 hours per year out of 2,080 available working hours. The rest goes to admin, marketing, sales, and professional development.

Should my rate include taxes?

Yes. Freelancers pay both the employee and employer portion of Social Security and Medicare taxes (self-employment tax), totaling 15.3%. Set aside 25-35% of your income for taxes.

How often should I raise my rates?

Review and increase your rates annually (5-10%) or with each new client. As you gain experience, build a portfolio, and develop specialized skills, your rates should increase accordingly.

Should I charge hourly or per project?

Project-based pricing is often better because it ties your pay to value rather than time. However, knowing your hourly rate helps ensure project fees cover your time. Many freelancers use a hybrid approach.