Freelance hourly rate calculator

Start from what you need the month to bring in, not from what the hour feels worth. Add the income you want to your business costs, divide by the share of revenue that actually stays with you after taxes and margin, and then divide that by the hours you can really bill.

Written out: revenue = (income + costs) / (1 - taxes - margin), and rate = revenue / billable hours. The second division is the one people get wrong, because billable hours are far fewer than worked hours.

Because you do not bill 176 hours. Prospecting, quoting, answering clients, invoicing and learning are all work, and none of them is paid by anyone. Take out days off across the year and the billable share drops again.

On top of that, taxes and your margin come off the top of revenue, not out of what is left over, and your business costs have to be paid before you pay yourself.

With this tool's default numbers the honest rate is more than twice the naive one. That gap is why the naive number feels like a fair price and still leaves nothing at the end of the month.

Any hour you work that no client is paying for: finding the next job, writing proposals, contracts and invoices, bookkeeping, email, keeping your tools and skills current, and redoing work that was not scoped.

A share between 20 and 40 percent is common, and it is higher for whoever is starting out, because prospecting takes a bigger slice when you have no returning clients. The tool lets you set your own share instead of assuming one.

In this calculation they are inside. Taxes are a percentage of revenue, so the rate has to be big enough that what remains after them still covers your costs and your income.

If you quote a price and add tax on top afterwards, set the tax field to zero here so the two are not counted twice.