Freelance Rate Calculator
Freelance Rate Calculator
The minimum hourly and day rate a freelancer or consultant needs to charge to take home a target income, after business expenses, a set-aside for tax, and the hours you cannot bill.
Minimum hourly rate
$12,00,000 take-home, $2,00,000 expenses, 20% set aside, 46 weeks of 40 hours, 60% billable
The minimum rate
- T
- the take-home income you want a year
- E
- business expenses a year
- s
- the share of profit (revenue less expenses) you set aside, as a decimal
- W × H × b
- working weeks × hours a week × billable share: the hours you can charge for
Worked example
$12,00,000 take-home, $2,00,000 expenses, 20% set aside, 46 weeks of 40 hours, 60% billable
Revenue needed = 2,00,000 + 12,00,000 ÷ 0.80 = $17,00,000
Billable hours = 46 × 40 × 0.60 = 1,104
Rate = 17,00,000 ÷ 1,104 = $1,539.86 an hour
Day rate = 1,539.86 × 8 = $12,319
Minimum hourly rate by billable share (same targets as the worked example)
| Billable share | Billable hours | Hourly rate |
|---|---|---|
| 40% | 736 | $2,309.78 |
| 50% | 920 | $1,847.83 |
| 60% | 1,104 | $1,539.86 |
| 70% | 1,288 | $1,319.88 |
| 80% | 1,472 | $1,154.89 |
Why a freelance rate must be higher than a salary divided by hours
An employee is paid for every week of the year, including leave, and the employer pays for the laptop and the office. A freelancer is paid only for the hours a client is billed, and pays their own costs. Divide a take-home target by 2,080 hours as if it were a salary and you get $576.92 an hour on $12,00,000; the calculator’s answer for the same take-home is $1,539.86, because it adds back expenses and the set-aside and divides by the 1,104 hours you can actually bill.
The set-aside is yours to choose. Income tax, and in some countries social contributions or indirect tax registration, depend on where you live and how much you earn, and this page does not know those rules; enter what your own estimate says, and add anything else you want to put aside, such as retirement saving. It is applied to profit, revenue less expenses, since tax is normally charged on profit rather than on turnover. Indirect taxes such as GST or VAT that you charge clients on top of your fee are not part of your rate; the GST calculator handles them.
Billable share is where most freelancers go wrong. Finding clients, proposals, invoicing, learning and chasing payments all take time nobody pays for. At 80% billable the example needs $1,154.89 an hour; at 60% it needs $1,539.86. Treat the result as a floor: it has no margin for a lean quarter or a client who pays late, so a cash buffer matters, as the emergency fund calculator shows. To price a product rather than your time, the markup calculator and the profit margin calculator work from cost. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How do I calculate my freelance hourly rate?
Add your yearly expenses to your take-home target grossed up for the set-aside, then divide by the hours you can bill. $12,00,000 take-home, $2,00,000 expenses, 20% set aside and 1,104 billable hours give $1,539.86 an hour.
How many hours a year can a freelancer bill?
Fewer than an employee works. 46 weeks of 40 hours with 60% billable is about 1,100 hours, against 2,080 paid hours in a salaried year. Track your own share for a few months.
What should I set aside for tax?
It depends on your country, your income and your deductions, so this page asks for your own estimate rather than applying any rates. A tax adviser or your tax authority’s guidance can give it.
How do I get a day rate?
Multiply the hourly rate by the hours in a billed day. At $1,539.86 and 8 hours it is $12,319.
Related calculators
References
- Internal Revenue Service. Self-Employed Individuals Tax Center: self-employed people generally pay income tax and self-employment tax on their net earnings and make quarterly estimated payments — an example of why the set-aside is applied to profit. https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center