Freelance Rate Calculator
Calculate your ideal hourly rate based on your income goals, business expenses, and taxes.
How to Calculate Your Freelance Rate
Setting the right freelance rate is one of the most important decisions you'll make as an independent worker. Charge too little and you'll burn out; charge too much and you might lose clients. This calculator helps you find the sweet spot based on real numbers.
The formula is straightforward: Hourly Rate = (Desired Income + Expenses + Taxes) / Billable Hours. However, most new freelancers underestimate their expenses, forget about self-employment tax (15.3% in the US), and overestimate how many hours they can actually bill.
Understanding Billable vs. Non-Billable Hours
Not every hour you work is a billable hour. As a freelancer, you also spend time on administrative tasks, marketing, client communication, invoicing, professional development, and business development. Most freelancers find that only 60-80% of their working hours are billable. Our calculator accounts for this so you don't end up undercharging.
Common Business Expenses for Freelancers
When calculating your rate, don't forget to account for expenses that traditional employees don't pay out of pocket: health insurance, retirement contributions, software subscriptions, equipment, professional liability insurance, coworking space, and accounting services. These typically add up to 15-30% of gross revenue.
Frequently Asked Questions
How do I calculate my freelance hourly rate?
Divide your desired annual income (plus expenses and taxes) by your total billable hours per year. For example, if you want to take home $75,000 after 25% taxes and 20% expenses, you need to earn approximately $125,000 in gross revenue. With 1,344 billable hours per year (48 weeks × 40 hours × 70% billable), your rate would be about $93/hour.
What is a good billable percentage for freelancers?
Most freelancers bill 60-80% of their working hours. The rest goes to admin, marketing, invoicing, and business development. Beginners often start around 50-60% as they build their client base, while experienced freelancers with steady work can reach 75-80%.
Should I include self-employment tax in my rate calculation?
Absolutely. As a self-employed person in the US, you pay both the employer and employee portions of Social Security and Medicare taxes, totaling 15.3%. This is in addition to your regular income tax. Many new freelancers overlook this and end up with a much smaller take-home than expected.
What's the difference between conservative, balanced, and aggressive presets?
Conservative assumes fewer work weeks (46), lower billable percentage (60%), higher expenses (25%), and higher taxes (30%) — giving you a higher, safer rate. Balanced uses typical freelancer averages. Aggressive assumes more weeks (50), higher billable percentage (80%), lower expenses (15%), and lower taxes (22%) — resulting in a lower rate that may be harder to sustain.