Check a first freelance rate: $40,000 take-home, $4,000 costs, a 25% tax reserve and 20 billable hours a week for 46 weeks comes to about $62.32 an hour.
Hourly Rate Calculator for Freelancers
Price your working time with a transparent formula.
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Freelance Hourly Rate Calculator desk
Work out a freelance hourly rate from income, costs, tax reserve and billable hours
Work through the Freelance Hourly Rate Calculator controls in order, then review the result before choosing your next action.
01
Enter your annual take-home goal and business costs, then choose the currency.
02
Set a tax reserve %, billable hours per week and working weeks per year.
03
Read the hourly and day rate, then copy the estimate with its assumptions.
$40,000 take-home, $4,000 costs, 25% tax reserve, 20 hours × 46 weeks
| Step | Calculation | Result |
|---|---|---|
| Profit before the tax reserve | $40,000 ÷ (1 − 0.25) | $53,333.33 |
| Revenue target | $53,333.33 + $4,000 costs | $57,333.33 |
| Billable hours per year | 20 hours × 46 weeks | 920 |
| Hourly rate | $57,333.33 ÷ 920 | $62.32 |
| Day rate (8 hours) | $62.32 × 8 | $498.55 |
The tax reserve is grossed up: 25% of $53,333.33 is $13,333.33, which leaves the $40,000 take-home goal. Round the result to a rate you can quote and treat it as a floor, not a market price.
PRACTICAL GUIDE
How to use Freelance Hourly Rate Calculator with a clear next step.
Enter the take-home income you want for the year, your annual business costs (software, insurance, equipment, accounting) and a tax reserve percentage. Then add your billable hours per week and the weeks you expect to work. The result is the base hourly rate that covers all three, plus the matching eight-hour day rate.
Use this freelance rate calculator to set or review what you charge per hour. Billable hours are the hours you can invoice, not the hours you work. Admin, sales, learning and unpaid revisions come out of the week, and working weeks should allow for holidays, sick days and gaps between projects. The result is a floor that covers your costs and target income. Market rates, scope, seniority and the value to the client may justify charging more. The calculation runs in the current browser session and no account is needed. Separate billable capacity from the hours you spend running the business. Twenty invoiceable hours across 46 working weeks means 920 annual billable hours, even if you work longer each week on sales and administration. Test a second scenario with 18 billable hours while keeping income, costs and reserve unchanged; the required rate rises because the same revenue target is spread over fewer hours. This is useful for assessing unpaid revisions or gaps between projects. Put annual software and insurance costs into the annual cost input, not a monthly amount that would understate expenses. If the result is unexpectedly high, inspect hours and working weeks before reducing the income goal. The displayed eight-hour day rate is arithmetic, so a shorter booked day or a fixed project fee needs its own calculation. Record the scenario you choose and revisit it after observing actual invoiceable hours.
HOW THE RESULT WORKS
Revenue target = annual business costs + take-home goal ÷ (1 − tax reserve). Billable hours per year = billable hours per week × working weeks. Hourly rate = revenue target ÷ billable hours per year, and the day rate is that hourly rate × 8. The tax reserve is grossed up, not added on top: keeping $40,000 after a 25% reserve needs $53,333 of profit, not $50,000. The tax reserve is capped at 95%, hours at 168 a week and weeks at 52.
See how far your rate has to rise when billable hours drop, for example from 25 to 20 a week.
Turn the hourly figure into an eight-hour day rate for a project quote.
COMMON QUESTIONS
Freelance Hourly Rate Calculator FAQ
How is the hourly rate calculated?
(Annual business costs + take-home goal ÷ (1 − tax reserve)) ÷ (billable hours per week × working weeks). With $40,000 take-home, $4,000 costs, a 25% tax reserve and 20 hours × 46 weeks: $40,000 ÷ 0.75 = $53,333.33, plus $4,000 = $57,333.33, divided by 920 hours = $62.32 an hour.
Why divide by (1 − tax rate) instead of adding 25%?
The reserve is taken from profit, so it has to be grossed up. Adding 25% to $40,000 gives $50,000, and 25% of $50,000 leaves only $37,500. Dividing by 0.75 gives $53,333.33, and 25% of that leaves exactly $40,000.
How many billable hours should I enter?
Only the hours you can invoice. Admin, sales, learning and unpaid revisions come out of the week, so billable hours are usually well below the hours you work. Use your own timesheets if you have them.
Is the tax reserve my actual tax bill?
No. It is a planning percentage. Income tax, social or self-employment contributions and VAT or GST depend on your country and situation, so check them with an accountant or your tax authority.
Is anything I type uploaded?
No. The calculation runs in the current browser session and no account is needed.
Updated · Built and reviewed by Feroz Sheikh