CalcOak

Freelance Hourly Rate Calculator: turn the income you want into the rate you must charge

Software, insurance, equipment, accounting, coworking.

Income tax plus self-employment or national insurance.

Optional margin for slow months. 0 for break-even.

Holiday, sick days, gaps between clients.

Admin, marketing and proposals are unbillable.

Hourly rate to charge

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Day rate (8 h)

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Working weeks
Total hours worked
Billable hours per year
Gross revenue needed
Tax to set aside
Take-home incl. buffer
Effective income per hour worked

How to use this calculator

Start with the amount you want to keep for yourself each year, after tax and after the business has paid its own bills. Then fill in what running the business costs: a laptop every three years, software subscriptions, liability insurance, an accountant and perhaps a desk somewhere. Enter the combined tax rate you expect to pay on profit, how many weeks a year you will not be earning, the hours you genuinely work each week and the share of those hours a client will actually pay for. The rate updates as you type.

With the defaults the maths runs like this. Six weeks off leaves 46 working weeks, or 1,840 hours at 40 a week, of which 60 percent, 1,104 hours, are billable. To keep $60,000 and cover $6,000 of expenses at a 25 percent tax rate you need $88,000 of revenue; a 10 percent buffer lifts that to $96,800. Divided by 1,104 hours that is $87.68 an hour, or about $700 a day, even though your effective income for every hour you sit at the desk is only $32.61. Tick the rounding box and the tool suggests $90.

Why freelancers underprice themselves

The most common mistake is to take a former salary, divide by 2,080 and add a little. That number quietly assumes you will bill every hour of every week, which nobody does. Proposals, calls with prospects who never sign, invoicing, bookkeeping and keeping your skills current all eat time that no client pays for. It also assumes someone else is funding your holidays, sick leave, pension and the employer's share of social security, when in fact all of those now come out of what you invoice.

Seeing the gap between the rate you must charge and the income you will actually pocket makes it easier to hold your price in a negotiation, because you know what a discount really costs you. It is also a useful lever: the calculator shows immediately that lifting your billable share from 60 to 70 percent, or trimming two weeks of downtime, lowers the rate you need more than most cost savings ever will. Revisit it whenever your expenses, tax situation or working pattern changes.

Frequently asked questions

Why is the rate so much higher than my old salary divided by 2,080?+

A salaried employee is paid for every hour of the working year, including holidays, sick days, meetings and training. A freelancer is only paid for hours a client signs off, which is usually 50 to 70 percent of the hours actually worked. On top of that you fund your own equipment, software, insurance and pension, and you pay the employer share of social security or self-employment tax yourself. Dividing a salary by 2,080 ignores all of that.

What counts as billable share?+

Billable hours are the ones you can put on an invoice. Everything else, such as writing proposals, chasing payments, bookkeeping, marketing, learning new tools and answering emails from prospects, is unbillable. Most established freelancers land between 55 and 70 percent; people who are just starting out or who take many small projects are often nearer 50 percent.

Which tax rate should I enter?+

Use your expected combined rate on profit, not your headline income tax band. In the US that means federal and state income tax plus the 15.3 percent self-employment tax on most of your profit; in the UK it is income tax plus Class 4 National Insurance. An effective rate of 25 to 35 percent is common for a mid-income sole trader, but check with an accountant if you are unsure, because the figure moves the result a lot.

What is the profit buffer for?+

It adds a margin above the bare minimum so that a slow month, a client who pays late or an unexpected laptop replacement does not push you below your target. It also gives you room to discount for a large project without going underwater. Ten percent is a sensible starting point; set it to zero if you only want the break-even rate.

Should I charge by the hour or by the day?+

The day rate shown is simply eight times the hourly rate, which is what most agencies and contract marketplaces assume. Day rates are easier to quote and discourage clients from questioning every fifteen minutes, while hourly rates suit support work and small tasks. Whichever you use, the annual maths is the same, so make sure the number you quote clears the figure this calculator gives you.

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