Hourly Rate Calculator
The hourly rate a freelancer must charge to hit a target income after expenses, taxes, time off and unbillable hours — plus day rate and revenue needed.
Hourly Rate Calculator: with the default inputs, hourly rate to charge is $113.51.
What you want to keep per year after business expenses and taxes — the equivalent of a salary's net pay plus what an employer would have paid toward your benefits.
Hours you can actually invoice. Most freelancers bill 50–65% of a 40-hour week; the rest is sales, admin and email.
Vacation, sick days, holidays and the dry weeks between clients. 4–8 is realistic.
Software, equipment, insurance, health insurance premiums, coworking, accounting, marketing, retirement contributions you want to fund.
- Day rate
- $908
- Billable hours per year
- 1,150
- Revenue needed per year
- $130,533
- Pre-tax earnings needed
- $106,667Take-home target grossed up for the tax reserve.
- Tax reserve
- $26,667
- Equivalent employee hourly wage
- $38.46Your take-home target ÷ 2,080 hours — what the rate looks like next to a salaried job.
Assumptions
- The tax reserve is a flat percentage of pre-tax earnings; actual US liability depends on filing status, deductions and state.
- Expenses are not grossed up for tax because they are deductible against business income.
- 2,080 hours (40 × 52) is used for the employee-equivalent wage.
- Take-home$80,00061%
- Taxes$26,66720%
- Business expenses$12,0009%
- Profit buffer$11,8679%
| Billable hrs / week | Hours / year | Rate needed |
|---|---|---|
| 15 | 690 | $189 |
| 20 | 920 | $142 |
| 25 | 1,150 | $114 |
| 30 | 1,380 | $95 |
| 35 | 1,610 | $81 |
| 40 | 1,840 | $71 |
Same revenue target ($130,533) and 6 weeks off.
How this is worked out
The formula
Billable hours = hours per week × (52 − weeks off) Pre-tax earnings = take-home target ÷ (1 − tax reserve) Revenue needed = (pre-tax earnings + expenses) × (1 + profit margin) Hourly rate = revenue needed ÷ billable hours Day rate = hourly rate × hours per day
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- Target take-home income
- What you want to keep per year after business expenses and taxes — the equivalent of a salary's net pay plus what an employer would have paid toward your benefits.in dollars · 0 or more · defaults to 80000
- Billable hours per week
- Hours you can actually invoice. Most freelancers bill 50–65% of a 40-hour week; the rest is sales, admin and email.from 0.5 to 80 · defaults to 25
- Weeks off per year
- Vacation, sick days, holidays and the dry weeks between clients. 4–8 is realistic.from 0 to 51 · defaults to 6
- Annual business expenses
- Software, equipment, insurance, health insurance premiums, coworking, accounting, marketing, retirement contributions you want to fund.in dollars · 0 or more · defaults to 12000
- Profit margin on top(under More options)
- A buffer for slow months, reinvestment and growth, applied to the total. 0 if your income target already covers it.a percentage · from 0 to 100 · defaults to 10
- Tax reserve(under More options)
- Share of your earnings set aside for self-employment tax (15.3% on net earnings, covering both halves of Social Security and Medicare) plus federal and state income tax. 25–30% is typical for US freelancers at moderate incomes.a percentage · from 0 to 60 · defaults to 25
- Hours in a billable day(under More options)
- A number.from 1 to 16 · defaults to 8
What you get back
- Hourly rate to chargemain answer
- Day rate
- Billable hours per year
- Revenue needed per year
- Pre-tax earnings needed
- Take-home target grossed up for the tax reserve.
- Tax reserve
- Equivalent employee hourly wage
- Your take-home target ÷ 2,080 hours — what the rate looks like next to a salaried job.
What this assumes
- The tax reserve is a flat percentage of pre-tax earnings; actual US liability depends on filing status, deductions and state.
- Expenses are not grossed up for tax because they are deductible against business income.
- 2,080 hours (40 × 52) is used for the employee-equivalent wage.
About this calculator
The classic freelancer mistake is dividing last year's salary by 2,080 hours and calling that the rate. It ignores the four things that make self-employment different: you can't bill every hour, you don't get paid for time off, you pay both halves of Social Security and Medicare plus your own benefits, and the business has costs. Work through those and the number roughly doubles — which is why experienced contractors charge what they charge.
How to fill it in
- Target take-home income is what you want left after expenses and taxes — think of it as the net pay you'd want from a job, plus the value of benefits an employer would have covered (health insurance, retirement match).
- Billable hours per week is the honest number. A 40-hour week typically yields 20–30 invoiceable hours once proposals, invoicing, calls that don't convert, bookkeeping and learning are subtracted. New freelancers should assume the low end.
- Weeks off should include holidays, sick time and the gaps between engagements. Six weeks is a realistic starting point; four is aggressive.
- Business expenses: software, hardware, insurance (liability, health), a coworking desk, accounting, marketing, professional development, retirement contributions.
- Under More options, the tax reserve grosses up your take-home so the taxes come out of revenue rather than out of your pocket. US self-employment tax alone is 15.3% of net earnings; with federal and state income tax, 25–30% is a normal reserve at moderate incomes. The profit margin is a buffer for slow months and growth.
Reading the results
The hourly rate is what you must charge to hit the target if you actually bill the hours you said you would. The day rate is the same number times your billable day. Equivalent employee wage divides your take-home target by 2,080 — a reminder that a $95 rate isn't a $95/hour job. The table shows how sensitive the rate is to billable load: going from 25 to 20 billable hours a week raises the required rate by 25%.
Then check it against the market
This is a cost-plus floor, not a market price. If clients in your field pay $60 and you need $95, you have a business-model problem, not a pricing problem: raise billable utilization, cut expenses, or move upmarket. If the market pays $150 and you need $95, charge closer to $150 — pricing below the market signals inexperience and leaves nothing for the bad year. Project or value-based pricing usually beats hourly for experienced independents, but you still need this hourly floor to check that a fixed price makes sense.
Frequently asked questions
▸How do I calculate my freelance hourly rate?
Add your target take-home income (grossed up for taxes) to your annual business expenses, add a profit buffer, then divide by the hours you can realistically bill in a year — typically 1,000–1,400, not 2,080.
▸How many hours can a freelancer bill per year?
Most full-time independents bill 1,000–1,400 hours a year: 20–30 hours a week for 46–48 weeks. The rest goes to sales, admin, and gaps between projects.
▸How much should I set aside for taxes as a freelancer in the US?
Self-employment tax is 15.3% on net earnings (12.4% Social Security up to the wage base plus 2.9% Medicare), on top of federal and state income tax. Setting aside 25–30% of net income is a common rule; the IRS expects quarterly estimated payments.
▸Why is my freelance rate so much higher than my old hourly wage?
Because it has to cover unbillable time, unpaid time off, both halves of payroll taxes, benefits, equipment and the risk of dry spells. A rule of thumb is 2–3× the equivalent employee wage.
▸Should I charge hourly or per project?
Use your hourly floor to price projects: estimate hours, multiply, then add a contingency for scope creep. Fixed prices reward efficiency and are easier for clients to approve; hourly protects you when scope is unclear.
Put this calculator on your own site
A working hourly rate, free for any site, with no ads and no sign-up. It resizes to fit wherever you paste it and updates itself as this page improves.
Paste this anywhere. It works on any site, carries no ads, never expires, and always shows the current version.
Hourly Rate Calculator by CalculateItNow
The page's own title. The clearest description of what the link leads to.
The credit line sits outside the widget on purpose, so it is a real link on your page rather than one buried in a frame. Please keep it — it is what pays for CalculateItNow staying free and ad-free. The script only resizes the widget to fit its contents; drop it and the widget still works.
Browse every calculator widget·How to add it to WordPress, Squarespace or Wix
Related calculators
The questions people ask next to a hourly rate.
Convert pay between hourly, daily, weekly, biweekly, semimonthly, monthly and annual figures using your real hours per week and weeks worked per year.
Gross, operating and net profit with their margins from revenue, cost of goods sold, operating expenses, other costs and tax rate — an income statement with a chart.
Units and revenue needed to break even from fixed costs, price and variable cost per unit, plus contribution margin and a target-profit option.
Gross margin, markup and profit from cost and price — or the selling price for a target margin — with the margin-vs-markup table that trips everyone up.
Find what percent one number is of another, take a percentage of a number, or calculate percentage increase and decrease — with the working shown.
Sales commission from the sale amount and rate, with an optional tiered structure (higher rate above a threshold), base salary, and effective rate.