How to Use This Calculator
- Step 1 — Enter your values into the calculator fields above.
- Step 2 — Results update instantly as you type — no button to press.
- Step 3 — Adjust any input to explore different scenarios.
- Step 4 — Use the results to inform your pricing, planning, or decision.
How the Rate Is Calculated
The calculator works backwards from your goals. First it finds your total billable hours per year by multiplying your billable hours per week by your working weeks per year. Then it divides the sum of your desired income plus business expenses by those billable hours to find the rate you must charge. The critical insight is the difference between worked hours and billable hours: not every hour you work is one you can invoice. Admin, marketing, learning, and unpaid revisions all consume time. A realistic billable figure — often only half to two-thirds of your total working hours — is what makes this calculation honest rather than aspirational.
Worked Examples
A full-time freelancer
You want $80,000 in income, have $10,000 in annual expenses (software, equipment, insurance), bill 25 hours a week, and work 48 weeks a year. That is 1,200 billable hours, so you need to charge ($80,000 + $10,000) / 1,200 = $75 per hour. Many new freelancers are shocked the number is this high — but it reflects the reality of unbillable time.
A part-time side business
Targeting $20,000 from freelancing on the side, with $2,000 of expenses, billing 8 hours a week for 40 weeks (320 hours), you need $68.75 per hour. The higher-than-expected rate reflects the fixed expenses spread over fewer hours.
Accounting for time off
If you reduce working weeks from 50 to 45 to allow for holidays and sick time, your required rate rises, because the same income must come from fewer billable hours. Testing this shows why building rest into your rate from the start prevents burnout.
Real-World Scenarios
New freelancers use this to set a defensible starting rate instead of guessing or simply undercutting competitors. Established freelancers use it to check whether their current rate actually supports their income goals once expenses and unbillable time are honestly accounted for — many discover they have been undercharging for years. Anyone considering leaving employment for freelancing uses it to understand that a freelance rate is not comparable to an hourly wage, because it must cover expenses, taxes, time off, benefits, and the substantial unbillable hours that employment hides. Seeing the real number often reframes the decision entirely.
Common Mistakes to Avoid
- Confusing billable hours with worked hours — admin, marketing, and learning are real but unbillable, so a 40-hour week rarely yields 40 billable hours.
- Forgetting business expenses, which must be recovered through your rate on top of your desired income.
- Comparing a freelance rate directly to an employee hourly wage, which ignores that freelancers fund their own taxes, benefits, and time off.
- Not building time off into the working-weeks figure, which leads to a rate that only works if you never rest.
Frequently Asked Questions
How do I calculate my freelance hourly rate?
Add your desired annual income to your annual business expenses, then divide by your realistic billable hours for the year. If you want $80,000 plus $10,000 expenses over 1,200 billable hours, your rate is $75 per hour. The key is using billable hours, not total worked hours.
What is the difference between billable and worked hours?
Worked hours include everything you do — admin, marketing, learning, invoicing — while billable hours are only those you can charge a client for. Most freelancers bill only half to two-thirds of their working hours, which is why dividing by billable hours produces a realistically higher rate.
Why is my required rate higher than an employee wage?
Because a freelance rate must cover what an employer normally provides: taxes, benefits, paid time off, equipment, software, and the substantial unbillable hours of running a business. A freelance rate that merely matches an hourly wage almost always leaves you worse off.
Should I include taxes in my income goal?
Set your desired income as the amount you want to keep, then remember that taxes come out on top of that, so your true target is higher. Because tax situations vary widely, this calculator focuses on income and expenses; factor your expected tax rate into the income goal you enter.
Methodology & Accuracy
This calculator determines your required hourly rate by dividing the sum of your desired income and business expenses by your total billable hours, where billable hours equal weekly billable hours times working weeks. It deliberately separates billable hours from worked hours, because conflating them is the single biggest reason freelancers undercharge. The result is a floor — the minimum rate that makes your stated goals achievable. All calculation happens in your browser. Because tax obligations vary by location and structure, taxes are not separately modeled; account for them within the income goal you set.
Why You Can Trust This Tool
Everything runs locally in your browser, so your figures are never uploaded or stored. The page loads over HTTPS, needs no permissions or downloads, and gives consistent, reliable results every time — free, with no signup and no limits.