Free Calculators

Hourly Rate Calculator

Work out the hourly rate that actually pays your income goal, your expenses and your tax buffer, based on hours you can really bill.

Your numbers

$
What you want to pay yourself before personal tax.
$
Software, insurance, equipment, marketing, fees and other overheads.
After holidays, vacation and slow periods.
Only the hours a client actually pays for.
%
A cushion for income tax, savings and slow months.
Your Results
Recommended hourly rate-
Minimum hourly rate-
Billable hours per year-
Monthly revenue target-
Weekly revenue target-

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How is this calculated?

Your rate is your yearly money goal divided by the hours clients will actually pay for, not by every hour you work.

Billable Hours = Working Weeks x Billable Hours Per Week
Minimum Rate = (Desired Income + Business Expenses) / Billable Hours
Recommended Rate = Minimum Rate x (1 + Buffer % / 100)

Worked Example

Desired income: $60,000. Business expenses: $10,000. Working weeks: 48. Billable hours per week: 25. Buffer: 20 percent.

Billable hours = 48 x 25 = 1,200. Minimum rate = $70,000 / 1,200 = $58.33 an hour. Recommended rate = $58.33 x 1.20 = $70.00 an hour.

At $70 an hour, the monthly revenue target is $7,000 and the weekly target is $1,750.

How to Calculate Your Freelance Hourly Rate

Add the income you want to your yearly business expenses: that is the revenue your billable hours must produce. Then divide by billable hours only. This is where most new freelancers underprice: they divide by 2,080 hours (a full-time job's hours) even though a large share of a freelancer's week goes to quotes, emails, admin, marketing and unpaid revisions.

Finally add a buffer for income tax, savings and quiet months. Twenty percent is a reasonable starting cushion; raise it if your work is seasonal. Your recommended rate is the floor for profitable work, not a wish.

Why Your Hourly Rate Matters

Your rate sets your income ceiling. At too-low a rate, a fully booked calendar still misses your goal, and the only fix is working more hours you do not have. A rate built from real numbers is also easier to say with confidence, in negotiations and on your website, because you know exactly what it has to cover.

Compare your rate with the cost of hiring: the Employee Cost Calculator shows clients what an employee truly costs per hour, which is often closer to a fair freelance rate than the wage comparison suggests.

How to Improve Your Numbers

Raise your effective rate three ways: charge more, bill more of your week (productized services, retainers and minimum engagement sizes help), or cut the expenses the rate must carry. Review the rate whenever your expenses or income goal changes, and at least once a year. If clients consistently accept quickly, the market is telling you the rate has room to move.

Frequently Asked Questions

How many hours can a freelancer realistically bill?

Often 50 to 70 percent of working hours once admin, marketing, quoting and revisions are counted. New freelancers frequently bill less. Be honest in the billable hours field: an optimistic number produces a rate that cannot work.

Should my buffer cover income tax?

It should at least cushion it. Self-employed income is taxed without an employer withholding anything, so a buffer of 20 to 30 percent for tax, savings and slow periods is a common approach. A tax professional can give you a personal figure.

What if my rate comes out higher than competitors charge?

Then compete on something other than hourly price: fixed project pricing based on value, faster delivery, a narrower specialty, or packaged services. Working below your minimum rate is borrowing from yourself.

How do I move from hourly to project pricing?

Multiply your recommended rate by a realistic hour estimate, then add room for revisions and scope creep. Your hourly rate stays the internal yardstick even when clients see a single project price.

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