Freelance Rate Calculator

Calculate the hourly rate you need to charge based on your income goal, expenses, and billable time.

The amount you want to earn before adding business expenses and your tax/savings buffer.

Software, insurance, equipment, accounting, marketing, office costs, and other business expenses.

%

An additional amount to set aside for taxes, savings, benefits, or other costs not covered by your income target.

Excludes vacation, holidays, and other time off.

%

The percentage of your working hours you expect to bill to clients.

Billable hours per day

How to calculate a freelance hourly rate

  1. Add your desired income and annual business expenses.
  2. Account for taxes, savings, benefits, or other costs using a buffer.
  3. Estimate how many hours you will actually work.
  4. Estimate what percentage of those hours will be billable.
  5. Divide your annual revenue target by annual billable hours.

Freelance rate formula

Hourly Rate = Annual Revenue Target ÷ Annual Billable Hours

Annual Billable Hours = Working Weeks × Hours per Week × Billable Utilization

Annual revenue target starts with desired income plus expenses. The tax/savings buffer is treated as a percentage of that gross revenue: (income + expenses) ÷ (1 − buffer).

Why freelancers can't bill every working hour

Working time is also spent on sales, marketing, administration, bookkeeping, client communication, proposals, training, and other internal work.

A freelancer working 40 hours per week may only bill a portion of those hours.

Example freelance rate calculation

Desired income
$100,000
Business expenses
$15,000
Tax/savings buffer
25%
Working weeks
48
Hours per week
40
Billable utilization
60%
Annual working hours
1,920
Annual billable hours
1,152
Revenue target
$153,333.33
Required hourly rate
$133.10

Freelance rate vs salary

A freelance hourly rate generally needs to be higher than an employee's equivalent hourly wage because freelancers may need to cover non-billable time, business expenses, benefits, taxes, and time off.

Hourly rate vs day rate

A day rate is usually an hourly rate multiplied by the number of billable hours expected in a working day.

$125/hour × 8 hours = $1,000/day. Not every day-rate engagement is billed exactly this way.

Hourly rate vs project rate

An hourly rate charges based on time. A project rate charges a fixed amount for a defined scope of work. Use the hourly figure as a baseline when you estimate a project fee.

Consulting rate vs freelance rate

Consultants and freelancers can use the same underlying rate calculation. The actual price may vary based on specialization, scope, demand, and value delivered.

Important

This calculator estimates the rate needed to meet the financial assumptions you enter. It does not determine market rates, taxes, or what clients will be willing to pay.

Frequently asked questions

How do I calculate my freelance hourly rate?
Add your desired income and annual business expenses, then divide by (1 − your tax/savings buffer). Divide that annual revenue target by the hours you expect to bill. For $100,000 income, $15,000 expenses, a 25% buffer, and 1,152 billable hours, the required rate is about $133.10 per hour.
Why should freelance rates be higher than employee hourly pay?
A freelance rate usually needs to cover non-billable time, business expenses, benefits, taxes, and unpaid time off. An employee hourly wage typically does not include those costs.
What are billable hours?
Billable hours are working hours you charge directly to clients. Time spent on sales, administration, bookkeeping, proposals, and other internal work is usually not billed.
What billable utilization should I use?
There is no single percentage that fits every freelancer. Utilization depends on how much time you spend on sales, administration, and other non-billable work. Try a few values to see how the required rate changes.
How do I convert an hourly rate to a day rate?
Multiply the hourly rate by the number of billable hours you expect in a working day. At $133.10 per hour and 8 billable hours, the day rate is $1,064.81.
Should I charge hourly or by project?
Either can be appropriate depending on the scope and how you prefer to price the work. This calculator gives an hourly baseline you can also use to sense-check a project fee.

Related tools

Put the rate on an invoice with the Invoice Generator or track hours in the Timesheet Generator. Check invoice totals in the Invoice Calculator or price a deliverable with the Markup & Margin Calculator. For more on setting fees, see How to Price Your Services or browse All Calculators.