πΌ Freelance Hourly Rate Calculator
Turn your income goal into a rate that covers taxes, expenses, and time off.
Recommended Hourly Rate
Estimates for planning only, not financial advice.
How to Use This Calculator
This calculator works backward from the life you want to the rate you must charge. Enter the annual income you want to take home, your yearly business costs, and the tax percentage you set aside from each payment.
Enter your target annual income (take-home goal) and your annual business expenses: software, hardware, coworking, insurance, and similar costs.
Set your tax reserve. Twenty-five percent is a common default; self-employed people pay 15.3 percent in self-employment tax plus income tax.
Drag the billable hours slider to an honest number. Twenty hours is typical; 40 is fantasy for almost everyone.
Set weeks worked per year (48 leaves four weeks for holidays, sick days, and slow periods). Read your hourly rate, day rate, and the 2x salary rule comparison.
The Formula: Gross Up, Then Divide by Real Hours
The formula has two moves. First, grossing up: your rate must generate enough before taxes to leave your target after taxes, so the target plus expenses is divided by (1 - tax rate). With a 25 percent reserve, every dollar of take-home needs $1.33 of revenue. Second, the honesty move: dividing by your real billable hours, not 2,080. Utilization is the ratio that reveals the truth. At 20 billable hours for 48 weeks, utilization is 960 / 2,080 = 46.2 percent, meaning more than half your working year is non-billable. The 2x salary rule ((target x 2) / 2,080) is the quick version of the same math: doubling the salary bakes in taxes, benefits, and non-billable time in one step.
Worked Example
Target income $100,000, business expenses $10,000, tax reserve 25 percent, 20 billable hours per week for 48 weeks. Billable hours per year = 20 x 48 = 960. Gross needed = (100,000 + 10,000) / (1 - 0.25) = 110,000 / 0.75 = $146,666.67. Hourly rate = 146,666.67 / 960 = $152.78 per hour. Day rate = 152.78 x 8 = $1,222.22. Utilization = 960 / 2,080 = 46.2 percent. The 2x rule check gives (100,000 x 2) / 2,080 = $96.15 per hour, well below the true $152.78, because this freelancer's real billable hours are far under full-time.
Utilization Is Where Rates Go to Die
The number one rate-setting mistake is dividing by 2,080 full-time hours. Nobody bills 2,080 hours. Proposals, onboarding calls, invoicing, chasing late payments, marketing, and learning all consume time you cannot charge for. Then subtract vacations, holidays, and sick days, plus the inevitable gaps between projects. A 40 to 60 percent utilization rate is normal and healthy. If the calculator's hourly rate shocks you, resist the urge to slide billable hours up to 35 to make the number smaller: that just builds a rate that collapses the first time you take a week off. Set the slider to what last month actually looked like, and let the rate be what it must be. Estimates for planning only, not financial advice.
Frequently Asked Questions
What multiplier over salary should freelancers charge?
The classic rule is 2x: take the salary you want to replace, double it, and divide by 2,080 working hours. A $100,000 salary becomes a $96 per hour rate. The multiplier exists because freelancers cover their own taxes, benefits, time off, and non-billable work. This calculator goes further by pricing your actual expenses, tax reserve, and real billable hours.
How do I account for self-employment tax?
In the US, self-employed people pay both halves of Social Security and Medicare: 15.3 percent on net earnings (up to the Social Security wage base), on top of ordinary income tax. That is why freelancers typically reserve 25 to 30 percent of every payment for taxes. This calculator grosses up your target income by your tax reserve percentage so your rate covers the tax bill.
How many billable hours are realistic per week?
Most freelancers bill 15 to 25 hours in a 40-hour work week; the rest goes to proposals, admin, marketing, and learning. Beginners and consultants with heavy business development can be under 15. The default here is 20 billable hours. Be honest with the slider: an optimistic 40-hour setting produces a low rate that will not survive contact with reality.
Should I charge hourly or per project?
Use the hourly rate from this calculator as your internal anchor, then price projects from it. If a project will take you 10 hours at a $150 hourly rate, quote $1,500 or more, not less. Project pricing lets you earn more as you get faster, but every quote should trace back to a rate that covers your costs, otherwise you discount your way into burnout.
How often should I raise my rates?
Review rates at least once a year, and raise them for new clients whenever demand supports it. A 5 to 10 percent annual increase roughly tracks inflation and growing skill. Existing long-term clients usually accept a smaller, announced increase with notice. If your calendar is full for more than a month, your rate is almost certainly too low.