What are billable hours?

Billable hours are the hours you actually charge a client for. They do NOT include time spent on emails, marketing, accounting, or learning. A typical freelancer only bills 50-60% of their working time.

Why do I need a profit margin?

Your salary pays for your lifestyle. Your profit margin pays for your business's future—upgrading equipment, hiring help, or surviving a slow month.

Does this include taxes?

You should include estimated taxes in your 'Annual Business Expenses' or increase your 'Desired Salary' to cover them. As a freelancer, you are responsible for your own tax withholding.

How many weeks off should I take?

Don't forget to account for holidays, sick days, and vacation. A standard employee gets 2-4 weeks, but as a freelancer, you should plan for at least 4 weeks of non-billable time.

Why is my rate so high?

Freelance rates must cover overheads that employers usually pay (office, insurance, taxes, downtime). If your rate looks high, it's likely accurate. Don't underprice yourself!

Freelance Hourly Rate Calculator

Stop guessing. Calculate exactly what you need to charge to hit your income goals.

1. Financial Goals

Desired Annual Salary ($)

Take-home pay goal

Annual Business Expenses ($)

Software, hardware, insurance

2. Work Capacity

Billable Hours per Week

Don't count admin/marketing time!

Weeks Off per Year

Vacation + Sick days

3. Profit Margin

Profit Buffer (%)

0% (Risky)20%100%

Extra buffer for savings or growth.

The Freelancer's Pricing Trap

Many new freelancers make a fatal mistake: they take their old full-time hourly wage and add a few dollars. This is a recipe for burnout.

When you were an employee, your boss paid for your health insurance, office space, computer, software licenses, and the days you were sick. As a freelancer, you pay for all of that. Plus, you aren't paid for the time you spend finding new clients.

The Formula for Success

(Salary + Expenses + Profit) ÷ Billable Hours = Hourly Rate

Our calculator breaks this down into three critical components:

Financial Goals: What you need to live comfortably.
Overhead: What it costs to run your business.
Capacity: How much you can actually work.

Billable vs. Actual Hours

⚠️ The 60% Rule

Most freelancers can only bill for about 60% of their work week. The rest is admin, marketing, and sales.

If you work 40 hours a week, you likely only have 20-25 billable hours. If you calculate your rate based on 40 billable hours, you will earn half of what you expect. Be conservative with your estimates.

Frequently Asked Questions

Should I charge hourly or per project? ▼

This calculator gives you a baseline hourly rate. You can use this to price fixed-fee projects by estimating how many hours the project will take and multiplying by your rate. Fixed pricing is often better for experienced freelancers as it rewards efficiency.

How do I handle taxes? ▼

A general rule of thumb is to set aside 25-30% of your net income for taxes. You can add this amount to your "Annual Business Expenses" field in the calculator to ensure your rate covers it.

What if clients say my rate is too high? ▼

If your rate is based on real math (which this calculator provides), you can confidently explain why you charge what you do. Often, clients respect professionalism. If they still refuse, they might not be the right client for your business model.