Free hourly rate calculator
Hourly Rate Calculator
Work out the hourly rate you need to charge to hit your income goal after taxes, expenses, and profit. Adjust the inputs and the breakdown updates instantly.
Your numbers
Combined income + self-employment tax estimate. Many freelancers use 25-30%.
Software, equipment, insurance, marketing, etc. as a share of revenue.
A buffer on top of your pay, for growth, slow months, and reinvestment.
Recommended hourly rate
$99.21/hr
Based on 1,440 billable hours a year and $142,857 in revenue.
The math, line by line
- Your take-home pay
- $75,000.00
- + Taxes (25%)
- $25,000.00
- + Business expenses (20%)
- $28,571.43
- + Profit margin (10%)
- $14,285.71
- = Revenue you must bill
- $142,857.14
- ÷ Billable hours (30/wk × 48 wk)
- 1,440 hrs
- = Hourly rate
- $99.21/hr
Taxes are grossed up so your take-home is what you keep after tax. Expenses and profit are a share of total revenue. This is an estimate, not tax advice.
How to use this hourly rate calculator
Most freelancers and service businesses set their rate by guessing, or by copying what a competitor charges. That is how you end up underpaid. The defensible way is to work backwards from the income you actually want to keep, then add the costs of running a business on top.
Start with your target take-home pay, the money you want left after taxes. Enter how many hours a week you can realistically bill (almost never 40, since admin, sales, and breaks are unpaid), and how many weeks a year you work after vacation and holidays. Then add your tax rate, your business expenses as a share of revenue, and a profit margin. The calculator grosses up taxes, adds expenses and profit, and divides by your billable hours to give the rate you need to charge.
Common pitfalls when setting your rate
Billing 40 hours a week. Non-billable work, sales, invoicing, and learning eat 20-40% of your week. If you assume every hour is billable, your real rate falls short. Be honest about billable hours.
Forgetting self-employment tax. In the US, self-employed people pay both halves of Social Security and Medicare (about 15.3%) on top of income tax. A 25-30% combined rate is a safer estimate than your old W2 withholding.
Pricing with no profit margin. If your rate only covers your salary and costs, a slow month or a bad client wipes out your cushion. A profit margin funds growth and protects you from variance.
FAQs
Frequently asked questions
How do I calculate my hourly rate as a freelancer?
Work backwards from the income you want to keep. Add your taxes, business expenses, and a profit margin to find the total revenue you need, then divide by the number of hours you can actually bill in a year. This calculator does that math for you and shows each step.
How many billable hours should I assume per week?
Rarely a full 40. Once you account for sales, admin, invoicing, email, and breaks, most full-time freelancers bill 25-32 hours a week. Using a realistic billable number is the single biggest factor in setting a rate that actually pays you.
What tax rate should I use?
For US self-employed workers, a combined estimate of 25-30% covers federal income tax plus self-employment tax for many people, though your actual rate depends on income, state, and deductions. When in doubt, ask an accountant and use the higher end to be safe.
Should I include a profit margin if I am a solo freelancer?
Yes. Even as a one-person business, a profit margin is your buffer for slow months, equipment, and reinvestment. It is separate from your salary, your salary pays you to do the work; profit pays the business to exist.
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