How do I calculate my freelance hourly rate?

Calculate your required gross revenue by dividing your target net income by (1 - your tax rate), then add your annual business expenses. Finally, divide this gross revenue by your total billable hours per year.

What are unbillable hours?

Unbillable hours are time spent on administrative tasks, marketing, accounting, and sales calls that cannot be directly billed to a client. Usually, only 50-60% of a freelancer's working hours are actually billable.

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💼 Business

Freelance Hourly Rate Calculator

Calculate backwards from a Target Annual Net Income, factoring in taxes and expenses to find your required hourly rate.

⚡ Instant 🆓 Free 🔒 Private

Target Annual Net Income ($)

Estimated Taxes (%)

Annual Business Expenses ($)

Billable Hours / Week

Weeks Worked / Year

How to Calculate Your Freelance Hourly Rate

Setting the right hourly rate is one of the most critical decisions for any freelancer or independent contractor. Our Freelance Hourly Rate Calculator takes the guesswork out of pricing your services by reverse-engineering your required rate based on your target annual income, estimated taxes, and business expenses.

Formula for Required Hourly Rate

The calculation accounts for both your direct business expenses and the taxes you'll pay on your net income:

Required Gross Revenue = [Target Net Income / (1 - Tax Rate)] + Annual Expenses

Hourly Rate = Required Gross Revenue / Total Billable Hours

Understanding Billable vs. Unbillable Hours

As a freelancer, you cannot bill clients for 100% of the hours you work. Administrative tasks, marketing, accounting, and sales calls are all unbillable hours. A safe estimate is that only 50% to 60% of your total working hours are actually billable. Ensure you adjust your "Billable Hours / Week" accurately to avoid underpricing yourself.