How the freelance rate calculator works
An employee is paid for every working hour. A freelancer is paid only for billable hours, so the same annual income has to come from fewer hours. The calculator subtracts your weeks off, applies your billable share, adds your business expenses and an optional margin, and divides. Read how to set a freelance hourly rate for a step-by-step explanation, and compare with an employee offer using the salary to hourly calculator.
Freelance rate formula
Worked example
$80,000 income goal, $12,000 expenses, 6 weeks off, 40 hours a week, 65% billable
- Working weeks: 52 − 6 = 46.
- Billable hours: 46 × 40 × 65% = 1,196.
- Revenue needed: $80,000 + $12,000 = $92,000.00.
- Hourly rate: $92,000.00 ÷ 1,196 = $76.92, or $615.36 a day.
How billable share changes your rate
Same example, different billable shares.
| Billable share | Billable hours a year | Hourly rate | Day rate |
|---|---|---|---|
| 40% | 736 | $125.00 | $1,000.00 |
| 50% | 920 | $100.00 | $800.00 |
| 60% | 1,104 | $83.33 | $666.64 |
| 70% | 1,288 | $71.43 | $571.44 |
| 80% | 1,472 | $62.50 | $500.00 |
Frequently asked questions
How do I calculate my freelance hourly rate?
Add the income you want to the business expenses you will pay, then divide by the hours you can actually bill in a year. Billable hours are your working weeks times your weekly hours times the share of time you can invoice.
Why is my freelance rate so much higher than an employee hourly wage?
Freelancers are not paid for admin, sales, or time off, and they pay their own business costs. Spreading income and expenses over fewer billable hours raises the rate. Employers also cover costs, such as a share of payroll taxes and benefits, that freelancers pay themselves.
What is a realistic billable share?
It depends on your work. Time spent finding clients, invoicing, and learning is real work that you cannot bill. Track your own hours for a few weeks and use your actual percentage.
Does this include taxes?
No. The income goal is before income tax. If you want to cover self-employment tax, health insurance, or retirement savings, include them in business expenses or in your income goal.
How do I turn the rate into a project price?
Estimate the billable hours the project will take and multiply by your rate. Many freelancers add a buffer for revisions and scope changes.
Related guides
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How this calculator was built. The formula, defaults, and edge cases are documented in a research record and covered by automated tests. It estimates gross amounts from your inputs; it does not determine legal entitlements, taxes, or take-home pay. Read our methodology and disclaimer.
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