Freelance Hourly Rate Calculator

How do I calculate my freelance hourly rate?

Add annual business costs to your income goal before tax, then divide by annual billable hours. This is your break-even rate: the hourly price that funds your plan. Add your chosen profit markup for a target rate.

Use one currency throughout: USD, GBP, EUR, CAD or AUD. Enter annual costs, billable hours and whole weeks off. Show the math explains the calculation.

How much should I charge per hour to earn $70,000 a year?

Consider an illustrative freelancer, Sam, with a $70,000 annual income goal before tax and $8,000 in annual costs. Sam expects to bill 25 hours each week and take six weeks off. That leaves 46 working weeks and 1,150 billable hours. With no tax reserve, the annual funding requirement is $78,000. Dividing $78,000 by 1,150 gives a minimum hourly rate of $67.83.

A 15% profit markup produces a target rate of $78.00 per hour using the unrounded result. At that rate and workload, annual revenue is $89,700, leaving $11,700 above the income-and-cost plan. If Sam bills only 20 hours each week, the minimum rises to $84.78. Keeping the same income goal while reducing available hours requires a higher rate.

How many billable hours should a freelancer use?

Billable hours are hours a client has agreed to pay for. Working hours also include sales, proposals, admin and training. Record both over a representative month, then estimate weekly paid hours.

Billable percentage equals billable hours divided by total working hours, multiplied by 100. At 25 paid hours out of 40, it is 62.5%; enter the remaining 37.5% as non-billable time. Allow for holidays, admin and slow weeks. Compare a quieter schedule with your normal schedule before committing to a long engagement.

What business expenses belong in a freelance rate?

Include the resources your work needs: subscriptions, professional insurance, replacement equipment and the benefits you fund yourself. Enter annual amounts, so a monthly software bill of $100 becomes $1,200 for the year. Equipment can be a planned replacement budget rather than the cost of buying everything again. The cost table totals the five categories; combine other overhead with the category that best fits your own planning records.

Keep the income goal and cost budget separate. If your income goal already includes healthcare or retirement savings, leave those entries at zero. This table is a pricing budget; entering a cost here does not establish that it is deductible.

Should my freelance rate include self-employment tax?

The optional reserve is a budgeting allowance you choose, applied to income plus annual costs. Leave it blank for a before-tax plan. Keep that allowance separate from the tax calculation for your actual earnings.

US self-employment tax is 15.3%: 12.4% for Social Security and 2.9% for Medicare. Generally, it applies to 92.35% of net earnings from self-employment, as explained in IRS Topic 554: Self-Employment Tax. The Social Security portion has an annual earnings cap, published on the SSA contribution and benefit base page. Checked October 13, 2026. Check the current year’s figures on IRS.gov.

What is the difference between break-even and a target rate?

Break-even covers the income goal, costs and reserve. The target adds a profit markup to that floor: 15% multiplies break-even by 1.15. A markup is measured against the funding requirement; a profit margin is measured as a share of final revenue.

Profit provides room beyond the income-and-cost plan. A project contingency covers a specific uncertainty, such as extra delivery hours; include those hours in the estimate and avoid adding the same allowance twice.

How do I convert an hourly rate to a day rate or project price?

A freelance day rate is the price for an agreed day of work. Multiply your hourly target by the billable hours included: at $78.00, six hours gives $468.00 per day. State the hours, deliverables and travel included.

Project mode adds delivery hours to revision rounds multiplied by hours per round. At $78.00, 20 delivery hours plus two rounds of two hours gives $1,872 before fees. A 5% fee on the final charge requires $1,872 divided by 0.95, or $1,970.53. Define the included rounds and deliverables.

Use the freelance invoice template to describe the agreed service, quantity and rate.

How do you convert a salary to a freelance rate?

Start with the annual salary you want to replace, before tax. Add self-funded benefits and business overhead once, then divide by expected annual billable hours. Paid holidays reduce the hours you can sell; their income replacement is already in the annual goal. Dividing salary by all employee working hours leaves those costs and unpaid time out.

What is a good freelance hourly rate?

A useful rate funds your plan and fits the work buyers purchase. Compare prices for the same service, experience, market and scope. Record whether each includes revisions, meetings, travel or specialist expertise.

Compare the same discipline and included service: a designer’s quote may include strategy and revisions, while another covers production only. Use recent offers and your own accepted proposals. If a buyer’s budget falls below your floor, reduce the scope or reassess costs and billable capacity.

What is a good freelance rate for beginners?

Calculate your floor using realistic paid hours, allowing time to find clients. Compare a quieter-week scenario. A beginner discount needs a defined scope, an end date and enough revenue to fund the work.

Offer a small paid assignment with clear deliverables and revision limits. Compare actual delivery and admin hours with your plan, then adjust the next price or scope.

Should I charge hourly, by project, or on retainer?

Hourly pricing suits work whose time requirements can change: agree what time is chargeable and how extra hours are approved. A fixed project fee suits defined deliverables; build it from delivery hours, revision allowances and explicit scope limits. Faster delivery then changes your effective hourly earnings, while unexpected extra work uses up the allowance.

A retainer reserves recurring capacity or deliverables for a stated period. As a planning example, 10 included hours at $78.00 gives $780.00 per month. Specify included work, availability, unused-hour treatment and the price of extra work. Price reserved capacity even when it is not fully used; the agreement defines what the client buys.

How often should I raise my freelance rates?

Review yearly or before renewing a substantial engagement, and sooner when costs, paid hours or responsibilities change. Recalculate the floor, compare actual project earnings and assess demand before deciding on an increase.

Rate-increase mode compares revenue before costs and tax, assuming equally sized clients and unfilled lost hours. Raising $65.00 by 15% gives $74.75. Keeping nine of ten clients gives 1.15 × 0.90 = 1.035, a 3.5% revenue increase. Compare an unusually large client separately through billable hours.

How do I tell a client my freelance rate is going up?

State the effective date, new rate and work it covers. For example: “Hi Alex, my rate for new work from March 1 will be $85 per hour. The current scope stays at its agreed price. I can prepare an updated estimate for the next phase. Thank you for working with me.”

Choose notice that fits the agreement and timeline. For a fixed client budget, discuss the deliverables or hours it buys at the new rate.

Who uses a freelance hourly rate calculator?

Designers and developers

Include discovery, meetings and revisions in paid capacity, alongside production work. A designer planning $54,000 of income and $6,000 of costs across 1,000 billable hours has a $60.00 floor; a 10% markup gives a $66.00 target. Compare actual project hours with that plan after delivery.

1099 contractors moving from full-time employment

Replace salary and self-funded benefits in the annual budget. A $60,000 income goal, $6,000 for benefits and $4,000 overhead total $70,000. At 20 billable hours over 46 weeks, $70,000 ÷ 920 gives a $76.09 floor before reserve or profit. Count benefits once.

Small studios sharing costs

Combine the team’s income goals and shared overhead, then use the team’s total billable hours. Two people each aiming for $50,000, with $20,000 of shared costs and 2,000 combined billable hours, need a $60.00 floor. A 15% markup gives $69.00 per team member’s billable hour.

What is the next step after choosing my rate?

Turn into an invoice puts the selected result in the Rate column of one service line in an editable invoice after free registration. By the hour uses the target hourly rate; By the day uses the day rate; By the project uses the project price; Raise my rate uses the proposed hourly rate. Quantity starts at one, with hours, days or projects as the unit. Or make it without an account carries the same line into the free invoice generator.

For Sam’s $78.00 hourly target, the line starts at quantity 1 and rate $78.00. Change quantity to 10 agreed billable hours for a $780.00 line amount. Add the client and describe the completed service; the break-even floor stays in your pricing plan.