Hourly Rate Calculator
Your hourly rate is not your salary divided by 2,080 hours — most of your week is not billable, and your expenses come out of what you earn. Enter the income you want, the hours you can realistically bill, and your costs, and this free calculator returns the hourly rate you actually need to charge to hit your target.
Why your hourly rate isn’t salary ÷ hours
A common mistake when going freelance is to take a target salary, divide by 2,080 (40 hours × 52 weeks) and call that the hourly rate. It badly undercharges, for two reasons. First, most of your time is not billable: admin, sales, proposals, learning, holidays and gaps between clients all eat into the week. Second, your expenses come out of your rate — software, equipment, insurance, accounting and taxes are not separate, they are part of what you must earn.
This calculator builds the rate up from what you actually keep, the hours you can actually bill, and the costs you actually carry.
The hourly rate formula
Billable hours per year = billable hours per week × working weeks
Hourly rate = (desired income + business expenses) ÷ billable hours per year
Notice the rate rises sharply as billable hours fall. Halving your billable hours roughly doubles the rate you must charge — which is why an honest estimate of billable time is the single most important input.
A worked example
You want to earn $80,000, can realistically bill 25 hours a week over 46 working weeks, and carry $10,000 in expenses.
- Billable hours: 25 × 46 = 1,150 hours
- Total to earn: $80,000 + $10,000 = $90,000
- Hourly rate: $90,000 ÷ 1,150 ≈ $78/hour
If you assumed a full 40 billable hours instead, you would have set your rate near $39 — and worked twice as hard for the same money.
How many hours can you really bill?
For most independent professionals, realistic billable time is 50–65% of working hours once sales, admin and downtime are removed. New freelancers often bill far less while they build a pipeline. Be conservative: it is safer to set the rate against fewer billable hours and be pleasantly surprised than to over-commit your week and earn less than planned. Also subtract holidays and sick days from your working weeks — 46–48 weeks is realistic, not 52.
Don’t forget taxes and a margin
The "desired income" should be what you want to keep after tax only if you also add your tax bill to expenses — otherwise treat the income figure as pre-tax and set money aside. Many freelancers also add a margin on top of the bare break-even rate, both as a profit buffer and because a slightly higher rate signals quality and gives room to discount. Run the calculator once for your minimum survivable rate, then set your actual price comfortably above it.
Frequently asked questions
Is the hourly rate calculator free?
Yes, free and with no sign-up. It runs in your browser and stores nothing you enter.
How do I calculate my freelance hourly rate?
Add your desired annual income to your yearly business expenses, then divide by the number of hours you can realistically bill in a year (billable hours per week multiplied by working weeks).
Why is the rate so much higher than my old salary rate?
Because only part of your week is billable and your expenses come out of your earnings. An employee’s salary already excludes the employer’s overheads and non-billable time; as a freelancer you carry all of it.
What is a realistic number of billable hours?
For most independent professionals, 50–65% of working hours end up billable once sales, admin and downtime are removed. Newer freelancers should assume less while building a client base.
Should the income figure be before or after tax?
Treat it as pre-tax and set money aside for tax, or include your expected tax bill in the expenses field so the rate covers it. Either works as long as you are consistent.
Should I charge exactly the calculated rate?
Use it as your minimum. Most professionals add a margin above the break-even rate for profit, buffer and room to discount, so the calculated number is a floor rather than the final price.
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