Freelance Hourly Rate Calculator
The rate you must charge to hit your income target.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Minimum hourly rate
- $103.57
- Day rate (8 hrs)
- $828.60
- Required annual revenue
- $119,111.11
- Billable hours per year
- 1,150
Quick answer
Your minimum freelance rate is the revenue you need — take-home income grossed up for tax, plus business expenses — divided by the hours you can actually bill in a year. For $80,000 take-home, $8,000 of expenses, a 28% effective tax rate and 25 billable hours a week for 46 weeks, you need $119,111 of revenue over 1,150 hours: $103.57 an hour, or $828.60 for an 8-hour day.
What the Freelance Hourly Rate calculator does
This calculator works backwards from the income you want to keep to the hourly rate, day rate and annual revenue that would deliver it. It is built for freelancers, contractors and independent consultants setting rates for the first time, raising them, or checking whether a quoted project price is worth taking.
The number it gives is a floor, not a market price. It tells you what you must earn per billable hour to stay afloat; what clients will pay depends on your niche, experience and how you package the work. If the floor is above what your market pays, the fix is usually more billable hours, lower costs or a narrower, better-paid specialism — not working for less.
The tax figure is a single effective rate on profit. In the US that should include self-employment tax as well as income tax, and it is worth comparing the result with an employed salary using the hourly to salary calculator.
The formula
Hourly rate = (Target ÷ (1 − tax rate) + Expenses) ÷ (Billable hours per week × Working weeks)
| Symbol | Meaning | Unit |
|---|---|---|
| Target | Income you want to keep after tax for the year | $ |
| tax rate | Effective tax rate on business profit, as a decimal (28% = 0.28) | — |
| Expenses | Annual business costs: software, equipment, insurance, accounting, coworking, training | $ |
| Billable hours per week | Hours you can invoice, excluding admin, sales and unpaid revisions | hours |
| Working weeks | Weeks per year you are available to work, after vacation, public holidays and sick days | weeks |
Dividing the target by (1 − tax rate) grosses it up so that, after tax, the target is left. Expenses are added after the gross-up because they are normally deductible, so they are not taxed. The day rate is the hourly rate × 8; if your working day is 7 or 7.5 hours, multiply by that instead.
The method is a cost-plus floor. It does not include profit on top of your own pay, retirement contributions (put those inside the target) or slow-paying clients.
Worked examples
Part-time designer building a client base
A designer wants $60,000 take-home, has $4,000 of costs, estimates a 25% effective tax rate, and expects to bill 20 hours a week for 44 weeks.
Inputs
- Target take-home income60000 $
- Annual business expenses4000 $
- Effective tax rate25 %
- Billable hours per week20 hrs
- Working weeks per year44 weeks
Result
- Minimum hourly rate$95.45
- Day rate (8 hrs)$763.64
- Required annual revenue$84,000.00
- Billable hours per year880
Only 880 billable hours a year means a floor of $95.45 an hour. Adding 5 billable hours a week would cut that rate noticeably, which is why winning steady work matters as much as the headline rate.
Established consultant quoting day rates
A consultant targeting $120,000 take-home with $15,000 of costs (insurance, travel, software), a 32% effective tax rate, 30 billable hours a week and 47 working weeks.
Inputs
- Target take-home income120000 $
- Annual business expenses15000 $
- Effective tax rate32 %
- Billable hours per week30 hrs
- Working weeks per year47 weeks
Result
- Minimum hourly rate$135.79
- Day rate (8 hrs)$1,086.36
- Required annual revenue$191,470.59
- Billable hours per year1,410
The floor is $135.79 an hour, or about $1,086 for an 8-hour day, on $191,471 of annual revenue. Consultants usually round a day rate up to a clean figure and quote half-day rates at slightly more than half.
Default: full-time freelancer
$80,000 take-home, $8,000 of expenses, 28% tax, 25 billable hours a week, 46 weeks.
Inputs
- Target take-home income80000 $
- Annual business expenses8000 $
- Effective tax rate28 %
- Billable hours per week25 hrs
- Working weeks per year46 weeks
Result
- Minimum hourly rate$103.57
- Day rate (8 hrs)$828.60
- Required annual revenue$119,111.11
- Billable hours per year1,150
At $103.57 an hour, a freelancer who bills 25 of a 40-hour week is effectively earning that rate on 62.5% of their time. Quoting $75 an hour "because 40 × $75 looks like a good salary" would leave a large shortfall.
How many hours can you really bill
Billable hours are the number most freelancers overestimate. Time spent finding clients, writing proposals, invoicing, bookkeeping, learning and doing unpaid revisions all comes out of the working week. Use your own time-tracking if you have it; otherwise, start conservatively and adjust after a quarter.
| Situation | Billable hours per week | Billable share |
|---|---|---|
| New freelancer, still marketing heavily | 15–20 | 38–50% |
| Established, mix of repeat and new clients | 20–30 | 50–75% |
| Long contract or agency placement | 30–35 | 75–88% |
Turning the hourly floor into day rates, project quotes and retainers
- Day rate: hourly floor × the hours in your working day. Consultants often quote by the day so clients are not counting minutes; at the default inputs that is $828.60 for 8 hours.
- Project quote: estimate the hours, multiply by your rate, then add a contingency for revisions and scope creep — 10–20% is common. A 40-hour job at $103.57 is $4,142.80 before contingency.
- Project fee vs hourly: a fixed fee rewards you for working efficiently, but only if the scope is written down. Use the hourly floor to check that the fee covers your realistic hours, not the optimistic ones.
- Retainer: a monthly fee for a reserved block of time, for example 10 hours × $103.57 = $1,035.70. Retainers often carry a small discount in exchange for guaranteed income, and should state what happens to unused hours.
What to include in expenses and tax
Expenses are what employers would normally pay for you: equipment, software subscriptions, professional insurance, accountant fees, a coworking desk, training, phone and internet, and health insurance where you buy your own. Retirement savings are better included in the take-home target.
The effective tax rate is total tax divided by profit, not your top bracket. In the US that combines federal income tax, state income tax and self-employment tax (15.3% on 92.35% of net earnings, covering Social Security and Medicare). In the UK it would combine income tax and Class 4 National Insurance. An accountant can give you a realistic figure from last year's return.
How to use the Freelance Hourly Rate Calculator
- 1Enter the yearly income you want to keep after tax, including anything you want to put into retirement savings.
- 2Enter your annual business expenses — add up subscriptions, equipment, insurance and professional fees from last year's records.
- 3Enter your effective tax rate on profit (total tax ÷ profit); include self-employment or National Insurance contributions.
- 4Enter billable hours per week and working weeks per year after vacation, holidays and sick days.
- 5Read the minimum hourly rate and day rate, then round up to a market-appropriate figure for quotes.
Frequently asked questions
How do I calculate my freelance hourly rate?
Add your desired take-home pay grossed up for tax to your annual business expenses, then divide by the hours you can bill in a year. With 25 billable hours a week for 46 weeks, that divisor is 1,150 hours.
Why should a freelancer charge more than an employee's hourly wage?
A freelancer pays their own equipment, insurance and employer-side taxes, gets no paid vacation or sick leave, and can bill only part of the week. A rate that matches an employee's wage per hour leaves a freelancer well short of the same income.
How do I work out a consulting day rate?
Multiply your minimum hourly rate by the hours in your working day — 8 in the calculator, or 7 to 7.5 if that is your norm. Many consultants then round up and set a minimum booking of half a day.
Should I quote by the hour or by the project?
Quote by the project when the scope is clear and you can work efficiently; quote hourly when the scope is uncertain. Either way, check the project price against your hourly floor times realistic hours plus a contingency.
How often should I raise my freelance rates?
Review them at least once a year, and whenever your costs, tax position or demand change. Raising rates for new clients first is the lowest-risk way to test a higher price.
References
- Self-Employment Tax (Social Security and Medicare Taxes) — Internal Revenue Service
- Working for yourself – guidance for the self-employed — HM Revenue & Customs (GOV.UK)
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
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