Freelance hourly rate calculator
Copying the going rate is how many freelancers end up busy and broke, because it ignores what their own life costs to run. Here you begin with the money you want to keep each year, add tax, insurance, tools, savings and time off, and spread the total over the hours a client will genuinely pay for. The result is a floor you should never go under, a safer rate with a cushion built in, and the matching day and project prices.
Same income, different billable shares
Nothing changes your rate as much as the share of your week a client pays for. Each row keeps your income target and changes only that share.
| Billable share | Billable hours a year | Break-even rate | Recommended rate | Day rate |
|---|
A full year, hour by hour
All the hours in a working year, divided into paid client work, unpaid admin and selling, and the weeks you take off.
What goes into the rate
Think of the rate as a stack. At the bottom is the money you keep, and every layer above it is something an employer would quietly have paid for you.
You get two answers. The floor rate hits your target only if every billable hour sells; the safer rate adds your cushion, so one quiet month does not undo the plan.
Add tax to the pay you keep
Tax comes out of profit, so you need to earn more than the amount you want in your pocket.
profit needed = take-home pay ÷ (1 − tax rate)
Add a year of running costs
Your monthly costs times twelve. Health cover and retirement saving count, because nobody else pays them now.
costs per year = (software + insurance + retirement + other) × 12
Put the cushion on top
The cushion is a slice of what you bill, so it is added by dividing, not by multiplying.
revenue needed = (profit needed + costs) ÷ (1 − margin)
Find your billable hours
Take only the weeks you work, then only the part of each week a client is paying for.
billable hours = (52 − weeks off) × hours per week × billable share
Share the total across those hours
That gives the safer hourly rate. Eight of those hours make a day rate, and your typical project length times it makes a project price.
hourly rate = revenue needed ÷ billable hours
Questions freelancers ask about their rate
What is the right way to work out a freelance hourly rate?
Pick the yearly pay you want to keep, add the tax due on it, add a year of business costs and a cushion for quiet spells. Then divide by the hours clients will really pay for, not the hours you sit at your desk. Whatever comes out is the lowest rate that still delivers your plan.
Why does my rate look so high next to my old salary?
In a job, your employer covered some of your tax, your insurance, your paid leave and every hour spent in meetings or waiting for work. Freelancing moves all of that onto the hours you bill. That is why a fair freelance rate is often two to three times the hourly pay of a similar salaried role.
How much of my working week can I realistically bill?
Somewhere between half and two thirds is typical for established freelancers. The rest disappears into prospecting, quotes, invoices, accounts and keeping your skills current. If you are new and have few repeat clients, assume less than half until your own time tracking says otherwise.
Hourly or fixed-price: which should I offer?
Hourly is safer when the brief is vague and likely to grow. Fixed prices earn more once you have done a type of job many times and work quickly, because the client buys the outcome. Either way, build the fixed price from your hourly rate: the hours you expect, times the rate, plus room for changes.
What share of each invoice should go to tax?
For US freelancers, self-employment tax is roughly 15.3 percent of profit before income tax is added, which is why many put aside 25 to 35 percent. Rules elsewhere differ. Ask an accountant for your figure and move that share of every payment into a separate savings account the day it arrives.
How big should my cushion be?
Start with 10 to 20 percent. It soaks up slow payers, gaps between projects and jobs that take longer than quoted. Without it, your rate only works in a year where nothing goes wrong.
When should I put my prices up?
Check your rate every year, and sooner if your calendar has been full for a couple of months straight, because that means you are cheaper than the market will bear. Quote the new rate to new clients first and give existing ones fair notice before it applies to them.