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Freelance Hourly Rate Estimator

Stop guessing your worth. Calculate the exact hourly rate you need to charge to cover your expenses, pay taxes, and actually make a profit.

Your Monthly Costs

Business Goals

Working Capacity

Your Minimum Hourly Rate

$59/hr

Target Annual Gross

$70,000

Total Billable Hours

1200 hrs/yr

Estimated Taxes

-$17,500

Pure Annual Profit

+$10,500

Note on Billable Hours: As a freelancer, you cannot bill 40 hours a week. Admin, marketing, and client meetings are unbillable. Averaging 20-25 true billable hours per week is standard.

How to Calculate Your Freelance Hourly Rate

The biggest mistake new freelancers make is taking their old corporate salary and dividing it by 2,080 hours (40 hours x 52 weeks). This mathematically guarantees failure because it ignores self-employment taxes, business overhead, vacation time, and the reality of unbillable hours.

The Mathematical Formula Used

To find a sustainable rate, you must work backward from your true costs, add a buffer for profit (so your business can grow), account for heavy taxation, and divide by realistic working hours.

Gross Revenue = (Costs + Profit Margin) / (1 - Tax Rate)
Hourly Rate = Gross Revenue / (Weekly Billable Hours × Weeks Worked)

A Quick Practical Example

Let's say you need $3,000/mo to live, and your software subscriptions cost $500/mo. Your base annual cost is $42,000.

  • You want a 20% profit margin to save for a house. (Target: $52,500)
  • You will pay roughly 25% in taxes. (Gross Target: $70,000)
  • You want 4 weeks of vacation, working 48 weeks.
  • You spend half your week doing admin, so you only have 25 billable hours a week.
  • Total billable hours: 1,200/year.
  • Result: $70,000 / 1,200 = $58.33 / hour.

If you charged $25/hr based on your old job, you would quickly go out of business.