Freelance Rate Calculator
Determine an hourly or project rate based on your desired salary and expenses.
Loading...
Calculate Your Ideal Freelance Rate
Our Freelance Rate Calculator helps you determine the hourly rate you need to charge to meet your income goals after accounting for taxes, expenses, and non-billable time.
What is a Freelance Rate Calculator?
A Freelance Rate Calculator is a financial planning tool specifically for self-employed individuals. It helps you move from a desired annual take-home salary to a realistic, profitable hourly rate. By factoring in all the costs of doing business—including taxes, overhead expenses, health insurance, retirement savings, and non-billable hours—it calculates the minimum hourly rate you must charge to cover your costs and achieve your income goals.
How It Works: From Salary to Hourly Rate
The calculator works backward from your desired income to find the required hourly rate:
1. Total Annual Overhead = Business Expenses + Taxes + Benefits Costs
2. Gross Income Needed = Desired Take-Home Salary + Total Annual Overhead
3. Total Billable Hours = Billable Hours per Week × (52 - Vacation Weeks)
4. Required Hourly Rate = Gross Income Needed / Total Billable Hours
Interpreting Your Required Rate
The key result is your **Required Hourly Rate**. This is the minimum you should charge for every billable hour to cover all your costs and pay yourself your desired salary. It is often significantly higher than an equivalent employee's hourly wage because it includes the "fully-loaded" cost of running your business. Use this number as your baseline when quoting projects and negotiating with clients.
Frequently Asked Questions
How do you calculate a freelance hourly rate?
To calculate a freelance hourly rate, start with your desired annual take-home salary. Add your estimated annual business expenses and taxes. Then, divide this total required gross income by the number of billable hours you plan to work in a year. Our Freelance Rate Calculator automates this entire process.
How many billable hours do freelancers work?
While a full-time employee works about 2,080 hours a year, a freelancer can only bill for a fraction of that time. A common estimate is around 1,000-1,500 billable hours per year, as the rest is spent on non-billable tasks like marketing, administration, and finding new clients.
Why should my freelance rate be higher than an employee's salary?
Your freelance rate needs to be significantly higher than an equivalent salaried hourly wage because you are responsible for covering all business costs, including self-employment taxes (both the employee and employer portions), health insurance, retirement savings, and all other overhead.
How do I account for taxes as a freelancer?
As a freelancer, you must pay self-employment tax (covering Social Security and Medicare, roughly 15.3%) in addition to your regular federal and state income taxes. It is highly recommended to set aside 25-35% of your gross freelance income for taxes and make quarterly estimated payments to the IRS.
Tips for Setting Your Rates
- Know Your Market: Research what other freelancers with your skills and experience are charging to ensure your rate is competitive but not undervalued.
- Offer Project-Based Pricing: Once you know your hourly rate, you can offer clients a fixed project price. This rewards you for efficiency and provides cost certainty for the client.
- Build in a Profit Margin: Your calculated rate is your break-even point. Add a profit margin (e.g., 10-20%) on top to allow your business to grow.
- Raise Your Rates Regularly: Plan to increase your rates annually to account for inflation and your growing experience.
Advertisement Placeholder