How to Set Your Freelance Hourly Rate
Work out the hourly and day rate you need from your target income, taxes, business costs, time off and billable hours, with a free freelance rate calculator.
Published
Free tool: Freelance Rate CalculatorThe most common freelancing mistake is taking an old salary, dividing by 2,080 hours and charging that. Freelancers pay their own taxes and expenses, get no paid time off, and spend hours each week on work they can't bill. This guide shows how to work out a rate that actually covers all that, using the free Freelance Rate Calculator.
Start from what you want to take home
Revenue needed = (take-home income ÷ (1 − tax rate) + expenses) × (1 + safety margin)
Hourly rate = revenue needed ÷ billable hours a year
Example: you want $80,000 a year after tax and costs, have $8,000 of business expenses, pay about 25% in income and self-employment tax, bill 25 hours a week, take 6 weeks off and add a 10% safety margin:
- Revenue needed: $126,133 a year, about $10,511 a month
- Billable hours: 25 × 46 weeks = 1,150
- Rate: $109.68 an hour, or $877 a day for 8 billable hours
Where each billed hour goes
Of the $109.68:
- Take-home pay: $69.57
- Taxes: $23.19
- Business expenses: $6.96
- Safety margin: $9.97
Billable hours change everything
Admin, sales, invoicing and learning eat into your week, so few freelancers bill 40 hours. For the same take-home pay:
| Billable hours a week | Hourly rate |
|---|---|
| 15 | $182.80 |
| 20 | $137.10 |
| 25 | $109.68 |
| 30 | $91.40 |
| 40 | $68.55 |
Be realistic: 20 to 30 billable hours a week is common for full-time freelancers.
Don't forget
- Taxes: in the US, self-employment tax adds about 15.3% on most of your profit on top of income tax, so a combined 25% to 35% is common.
- Expenses: software, equipment, insurance, health cover, retirement savings and professional fees.
- Time off: holidays, sick days and gaps between projects; 6 to 8 weeks a year is a reasonable assumption.
- The market: your rate also has to fit what clients pay for your skills and experience. If the number is above the market, cut costs, raise billable hours or move toward higher-value work and project pricing.
How to use the Freelance Rate Calculator
- Open the Freelance Rate Calculator.
- Enter the take-home income you want, after tax and business costs.
- Enter your yearly business expenses and your combined tax rate.
- Enter your billable hours per week, weeks off per year and a safety margin.
- Read the results: the hourly rate to charge, the day rate, the monthly and yearly revenue and your billable hours, with a breakdown of each billed hour, a chart of the rate needed by billable hours and a table of rates.
If you're comparing with a salaried job, see How to Convert Salary to Hourly.
Frequently asked questions
How do I calculate my freelance hourly rate?
Work out the revenue you need, take-home pay grossed up for tax plus expenses and a margin, then divide by your billable hours. $126,133 over 1,150 hours is about $110 an hour.
How many billable hours should I plan for?
Usually 20 to 30 a week for a full-time freelancer, since admin and finding work take time.
Why is a freelance rate so much higher than an hourly wage?
Because it has to cover taxes an employer would share, business costs, unpaid time off and non-billable hours. $80,000 of take-home pay needs about $110 an hour at 25 billable hours a week.