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Freelance Hourly Rate Calculator

Calculators · Added

Dividing the salary you want by 2,080 hours gives a rate roughly half of what you actually need, and it goes wrong in four places at once: nobody pays you for holidays, not every worked hour is billable, expenses come out before anything else, and there is no employer paying half the contributions. This works backwards from a take-home target through all four.

What you want to keep after tax. Add any pension contribution you want to make.

Software, hardware, insurance, accountancy, a desk, a share of the phone and internet.

%

Income tax plus social contributions, blended. No employer is paying half of it.

Holiday, public holidays and an allowance for illness. Nobody pays you for these.

%

Selling, quoting, invoicing, admin and learning are worked hours nobody pays for. 60-70% is typical.

%

Bad debt, disputes and discounts given to close a deal.

How to use the freelance hourly rate calculator

  1. 1Enter the income you want to keep after tax, and add anything you would want an employer to have provided — a pension contribution, for instance.
  2. 2Enter your yearly business expenses: software, hardware, insurance, accountancy, a desk, a share of the phone and internet.
  3. 3Set the weeks off, the hours you work in a week, and the share of those hours a client actually pays for.
  4. 4Enter a blended tax rate on profit, and read the hourly and day rate — then look at the sensitivity table before committing to it.

Examples

The gap the shortcut hides

Input
A target that a naive division puts at one rate
Result
The tool's rate against revenue ÷ 2,080, shown side by side

The difference is typically 50% or more, and it is why freelancers who price off a salary struggle.

Billable share is the sensitive input

Input
The same target at 80% billable and at 55%
Result
A rate difference of nearly half again

Track your hours for a month before trusting a guess here. Most people overestimate by twenty points.

Tax lands on profit, not revenue

Input
Expenses of 150,000 with a 25% tax rate
Result
The expenses are added after the grossing-up, not before

Doing it the other way round taxes money that was never profit and overstates the rate.

About the freelance hourly rate calculator

The arithmetic, in order

The calculation runs backwards from what you want to keep. Start with the take-home target. Gross it up for tax — dividing by one minus the tax rate, not multiplying by it, which is a common slip. Add the business expenses, because tax falls on profit rather than revenue and adding expenses before the grossing-up would tax money that was never profit. Then add an allowance for the share of invoices that never gets collected. That gives the revenue you have to invoice in a year.

The denominator is the honest working year. Fifty-two weeks minus the ones you take off and the ones illness takes for you, times the hours you work in a week, times the fraction of those hours a client will pay for. On typical figures that is around 1,200 billable hours, not 2,080 — and the ratio between those two numbers is most of why the shortcut fails.

The hours nobody pays for

Non-billable time is not slack. It is writing proposals, scoping calls that go nowhere, invoicing, chasing invoices, bookkeeping, filing returns, updating your own site, keeping current with tools, and the dead weeks between one project ending and the next starting. An employee has all of this done for them by a sales team, a finance team and a training budget; a freelancer does it themselves, unpaid, and it is a third of the week.

Because it is invisible it gets left out of rate calculations almost universally, and because it sits in the denominator its effect is large. Moving from an assumed 80% billable to a realistic 60% raises the required rate by a third. Anyone whose rate feels adequate on paper but who ends the year short is usually looking at this line.

What the rate does not tell you

This gives the rate that meets your target. Whether anyone will pay it is a separate question, and no calculator answers it. If the number comes out well above what your market pays, the problem is not the arithmetic — the options are to lower the target, cut expenses, raise the billable share, or move to work that is valued more highly.

It also says nothing about value-based pricing, where the fee is set by what the work is worth to the client rather than by what it costs you to deliver. That is often the better approach on projects with a clear commercial outcome. The rate here is still worth knowing in that case: it is the floor beneath which a project is not worth taking, whatever it is worth to them.

Frequently asked questions

Why is dividing a salary by 2,080 so wrong?
It bills every hour of a fifty-two week year, which nobody does. It assumes no business expenses, when a freelancer pays for their own tools, insurance and accountant. It ignores that an employee's payslip shows only half the social contributions actually paid on their work — the employer pays the rest, and a freelancer pays both halves. And it treats every worked hour as billable, when a third of them go on selling, quoting, invoicing and admin. Each of those is a multiplier, and they compound.
What billable share should I assume?
Between 55% and 70% for most independent freelancers over a full year, and lower in the first year or two when finding work takes more of the week. Above 85% is achievable only on a long retainer where somebody else is doing the selling. The figure matters more than any other input here, so the useful move is not to pick a number but to track your hours for a month — the gap between an assumed 80% and a real 55% is most of a salary.
Should I charge by the hour at all?
The rate is worth computing either way, because it tells you what a piece of work has to be worth. But an hourly rate ties your income to your time and quietly penalises you for getting faster, which is the wrong incentive on anything you have done before. Many people use the hourly figure privately to sanity-check a fixed price rather than quoting it to clients. What this calculator gives you is the floor: the number below which a project is costing you money.
What tax rate should I put in?
One blended percentage covering income tax and social contributions on your profit, for your country and your registration. It deliberately does not try to model a tax system: rates, thresholds, allowances, deductible expenses and social contribution schemes differ everywhere and change every year, and a wrong assumption baked into a calculator is worse than no assumption. An accountant will give you a realistic effective rate in one conversation.
Why is there an allowance for unpaid invoices?
Because some proportion of what you invoice never turns into money — a client disputes the scope, a business folds, a discount gets given to close a deal, or an invoice simply goes unpaid for long enough that chasing it costs more than it is worth. It is usually small, a few percent, but it comes straight off the top and a rate that ignores it is set fractionally too low. Employees do not have this line item, which is another reason the salary comparison misleads.

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