Freelance Hourly Rate Calculator
Enter your income target, business expenses, and billable hours to get the exact rate you need to charge — after tax, after expenses, based on hours you can actually bill.
The after-tax salary you want to pocket
Software, equipment, office, insurance, etc.
Default 25 — not all working hours are billable
Default 46 — allows for holidays and sick days
Income tax + self-employment tax + buffer. 30% is a reasonable starting point for many freelancers.
Why billable hours matter: A 40-hour week includes admin, marketing, invoicing, and downtime — most freelancers bill 20–30 hours. The gross-up for tax ensures that after you pay income tax and self-employment costs, you actually keep your target income. Your exact tax rate varies by country and income level — confirm it with an accountant and adjust the % above.
All calculations run in your browser. This tool provides estimates only and is not tax or financial advice. Confirm rates and figures with a qualified professional.
How to Set Your Freelance Rate
Most new freelancers pick a number that feels round and vaguely competitive — then wonder six months later why they are working full weeks and still not hitting their income goal. The problem is almost always the same: the rate was set without accounting for the hours that disappear, the tax that comes off the top, and the costs that don't show up on any invoice.
The right approach is to work backwards. Start with the take-home income you actually need — not a gross salary figure, but the money you want in your bank account after tax. Add your genuine annual business costs: software licences, hardware, a home office, professional insurance, accountancy fees. That gives you the floor. Then gross it up for tax (so you have enough left after the government takes its share), and divide by the hours you can realistically bill.
Why Billable Hours Are Not the Same as Working Hours
A freelancer working a 40-hour week does not bill 40 hours. A realistic breakdown looks more like this: 25 hours of chargeable client work, 5 hours of admin and invoicing, 4 hours of business development and proposals, 3 hours of learning and professional reading, and 3 hours of dead time between projects. That is not inefficiency — it is the normal shape of self-employment.
The classic error is dividing a target salary by 2,080 (52 weeks × 40 hours). A $60,000 target ÷ 2,080 = $28.85/hr. But $28.85/hr × 25 billable hours × 46 weeks = $33,235 gross — before tax. After a 30% tax haircut you take home roughly $23,000. That is less than half the target. The calculator above runs the correct maths so you can see the actual number you need to quote.
Accounting for Tax and Self-Employment Costs
As a freelancer or sole trader you carry costs that an employer usually absorbs: employer-side National Insurance or self-employment tax, no paid holiday, no sick pay, no pension contributions from an employer. These are real costs even when they are invisible.
A 30% tax and buffer figure is a workable starting point for many US and UK freelancers at a mid-range income. It is not exact — your actual rate depends on your country, income level, deductions, and business structure. But it is close enough to set an initial rate, and adjusting by 5 percentage points changes the headline rate by only a few pounds or dollars per hour.
Once you have a rate, review it each year. As income grows, your marginal tax rate rises. As you get busier, your non-billable time may shrink. As you add tools and equipment, expenses grow. The number you need to charge is not static.
Common Mistakes When Pricing Freelance Work
- Dividing a salary by 2,080: ignores tax, non-billable hours, and all overhead. The most common and costly mistake.
- Forgetting weeks off: holidays, illness, and slow periods add up. 46 working weeks is a better baseline than 52.
- Leaving out expenses: a £50/month software stack is £600/year. Equipment, insurance, and training costs add up fast.
- Setting the rate once and never revisiting it: costs go up, tax brackets change, and your own market value increases with experience.
- Charging the same rate for every client: specialist or rushed work warrants a premium. Your floor rate from this calculator is exactly that — a floor, not a ceiling.
Once you know your rate, you need to invoice at it. Build a professional invoice in seconds with our free invoice generator, or download a ready-to-edit freelance invoice template.
Frequently Asked Questions
How do I calculate my freelance hourly rate?
Add your desired take-home income to your annual business expenses. Divide that total by (1 minus your tax rate) to get the gross revenue you need. Then divide that figure by your total billable hours for the year (billable hours per week × weeks worked). The result is your minimum viable hourly rate.
Why use 25 billable hours per week instead of 40?
A 40-hour week as a freelancer is not 40 billable hours. Time goes to writing proposals, chasing invoices, bookkeeping, marketing, professional development, and plain downtime between projects. Most established freelancers bill 20–30 hours per week. Using 40 means your rate will be too low and you will not hit your income target.
What should I set for the tax and buffer percentage?
30% is a common starting point for a self-employed person in the US or UK at a mid-range income. It covers income tax plus self-employment or National Insurance contributions plus a small buffer for unexpected costs. If you earn more, pay higher state/local taxes, or live somewhere with higher rates, move it up to 35–40%. Your accountant can give you a precise figure based on your circumstances.
Should I include business expenses in the calculation?
Yes. Expenses like software subscriptions, hardware, a home-office allocation, professional insurance, and accountancy fees are real costs that your rate must cover. A client is not going to reimburse them separately, so they must be baked into what you charge. Forgetting expenses is one of the most common reasons new freelancers underprice.
My rate looks high — is that right?
Probably. The most common mistake freelancers make is treating their target salary like a full-time employee salary and dividing by 2,080 hours (52 weeks × 40 hours). That ignores unpaid time, tax, expenses, and no paid leave. A freelancer charging $50/hr is typically earning far less than an employee on $50/hr equivalent because the freelancer carries all the overhead. If the rate looks high, it is because the true cost of self-employment is higher than most people expect.