Freelance Rate Calculator

To calculate your freelance hourly rate, add your annual target net income, estimated income & self-employment taxes, and business expenses. Divide this gross required revenue by your total billable hours per year (Billable Hours = [52 - Weeks Off] × Billable Hours/Week).

Billable hours are hours spent directly producing deliverables for paying clients. Non-billable hours include business administration, marketing, proposal writing, invoicing, and client prospecting. Most full-time freelancers average 20 to 25 billable hours per 40-hour work week.

Freelancers must charge higher hourly rates than corporate employees because they pay self-employment taxes (15.3% in the US), fund their own health insurance, purchase equipment and software, and cover unpaid time off for vacations and illness.

Hourly billing is recommended for ongoing, un-scoped, or volatile projects. Project-based or value-based pricing is recommended for well-defined deliverables, allowing experienced freelancers to earn higher profit margins as their speed increases.

Most freelancers should set aside 25% to 30% of their net profit for income tax and self-employment taxes. Setting aside tax payments into a separate high-yield savings account avoids surprise tax bills.