How to use this calculator
- Enter your Target yearly income, the amount you want to keep after tax and costs.
- Add Business costs per year and your Tax and social contributions percentage.
- Set Billable hours per week realistically, and Weeks off per year for holidays and sickness.
- Read the Hourly rate needed, the day rate and the monthly revenue target.
How the rate is worked out
The calculator starts with the income you want to keep and grosses it up for tax, then adds business costs to get the revenue you must bill in a year. It divides that by the hours you can actually bill.
Rate = (Income ÷ (1 − Tax ÷ 100) + Costs) ÷ (Hours per week × (52 − Weeks off))- Income = target take-home income per year
- Tax = tax and social contribution rate on profit
- Costs = yearly business costs (software, equipment, insurance, workspace)
- Hours per week = billable hours, not hours worked
Only billable hours count. Time spent on admin, marketing, invoicing and finding clients is unpaid, which is why billable hours are much lower than a full working week.
Example: a $70,000 target
Aim for $70,000 take-home, with $6,000 of costs, 25% tax, 25 billable hours a week and 6 weeks off. You must bring in $99,333 a year, which is $8,278 a month. With 1,150 billable hours, the rate is $86.38 an hour, or $691 per 8-hour day.
Raise billable hours to 30 a week and the same income needs only $71.98 an hour. Filling your calendar matters nearly as much as raising your price.
Using the result
Treat the rate as a floor, not a price list. Charge more where the work is specialized, urgent or high value to the client, and consider fixed project prices when you can finish faster than the hours you quote.
Compare the number with an employee equivalent using the hourly to salary calculator. An employee also gets paid leave, benefits and employer contributions, so the freelance rate should be noticeably higher to leave you equally well off.
Common mistakes
- Assuming 40 billable hours a week; most freelancers bill far fewer.
- Forgetting time off, public holidays and sick days.
- Leaving out costs such as software, insurance, equipment and accounting.
- Underestimating tax; ask your accountant for the real rate, including self-employment contributions.
- Not allowing for late payments and gaps between projects; build a buffer with the emergency fund calculator.
Assumptions and limits
The tax rate is a single flat percentage applied to income, which simplifies progressive tax systems and does not separate deductible costs. The calculator does not include pension saving, health insurance, parental leave, bad debts or periods without work. Add retirement contributions or health costs to the yearly costs if you pay them yourself. Check local tax rules, for instance IRS guidance in the US, before fixing your rate.
Frequently asked questions
How do I calculate my freelance hourly rate?
Divide the revenue you need for the year (target income grossed up for tax, plus costs) by your realistic billable hours.
How many billable hours a week is realistic?
Often far fewer than a full week, because admin, sales and learning are unpaid. Use your own record of invoiced time.
Should I charge hourly or by project?
Hourly works when scope is unclear. Fixed prices suit well-defined work and can pay better if you are efficient. Use this rate to check both.
What tax rate should I enter?
Use your accountant's estimate of income tax plus self-employment or social contributions on profit. A flat guess is only a starting point.
Is the day rate just eight times the hourly rate?
Here it is, but a day rate often includes non-billable time inside the day, so you may price it slightly differently.