How to use the freelancer hourly rate calculator
- Enter the take-home income you want per year, your annual business expenses and your effective tax rate.
- Enter the hours you work per week and the weeks you take off each year.
- Estimate the share of your working time that cannot be billed, such as admin and sales.
- Read the minimum hourly and day rate and check the arithmetic shown step by step.
Worked example
$60,000 take-home, $10,000 expenses, 25% tax, 40 hours a week, 6 weeks off, 25% non-billable
You need $80,000 before tax, so $90,000 in revenue. Working 46 weeks × 40 hours = 1,840 hours, of which 75% (1,380 hours) are billable. The minimum rate is $65.22 an hour, or $521.74 for an 8-hour day.
How it works
Pre-tax profit = take-home ÷ (1 − tax rate). Revenue = pre-tax profit + expenses (divided by 1 − profit buffer if you add one). Billable hours = (52 − weeks off) × hours per week × (1 − non-billable share). Hourly rate = revenue ÷ billable hours. Day rate = hourly rate × billable hours per day.
Assumptions
- The tax rate is a single effective rate you supply; real tax systems are progressive and vary by country.
- Expenses are fixed for the year.
- You find enough work to fill every billable hour.
Frequently asked questions
Why is my rate so much higher than an employee hourly wage?
Freelancers pay their own expenses, time off and non-billable work, and often extra taxes or contributions that employers would cover. The rate has to fund all of that from billable hours only.
What non-billable percentage should I use?
Track your time for a few weeks. Many freelancers find that admin, sales and learning take a meaningful share of the week, especially when starting out.
Should I round the rate up?
Yes. The result is a minimum. Rounding up adds a cushion for quiet periods and late payments; the profit buffer option does this explicitly.
Limitations
- Does not model progressive tax brackets, retirement contributions or health insurance separately; include them in expenses or the tax rate.
- Does not account for market rates in your field.