Freelancer hourly rate calculator

Formula

How it works

Your target income is grossed up to cover the overhead/tax reserve you set aside, then divided by the hours you can actually bill in a year to find the rate per hour.

Worked example

The same calculation with the default values:

• Target annual income 60,000
• Billable hours per week 25
• Weeks worked per year 46
• Overhead / tax reserve 25 %
• Billable hours per day 8

1. gross revenue needed = 60,000 ÷ (1 − 25 ÷ 100) = 80,000
2. billable hours per year = 25 × 46 = 1,150
3. hourly rate = 80,000 ÷ 1,150 = 69.565217
4. daily rate = 69.565217 × 8 = 556.521739

Result: Required hourly rate: 69.57 USD · Required daily rate: 556.52 USD · Gross revenue needed: 80,000.00 USD

Common mistakes

• Counting all working hours as billable hours - most freelancers can only bill 50-70% of their time.
• Forgetting to include a tax/overhead reserve, then being short at tax time.
• Comparing this rate directly to an employee's hourly wage - it must also cover costs an employer would otherwise pay.