Enter Your Details
Hourly Rate to Charge
$0/hr
Total to Cover
$0
Billable Hours/Yr
0
Calculate the hourly rate you need to charge to hit your target income, accounting for expenses and non-billable time.
$0/hr
Total to Cover
$0
Billable Hours/Yr
0
Add your target take-home income and business expenses, then divide by your actual billable hours for the year (not total working hours), since a large share of freelance time is typically unbillable.
Hourly Rate = (Target Income + Expenses) / Billable Hours
A common freelance pricing mistake is dividing a target income by total working hours (say, 40 hours a week), which dramatically understates the rate actually needed. In practice, freelancers spend significant time on unbillable work: finding and pitching clients, invoicing and bookkeeping, professional development, and general administration. A billable percentage of 50-75% of total working time is typical, meaning only about half to three-quarters of hours worked actually generate revenue.
Software subscriptions, equipment, business insurance, a portion of home office costs, and other business expenses reduce revenue before it becomes take-home income, so they need to be added into the target amount your rate needs to cover, not treated as a separate cost clients see or absorbed silently from your own take-home pay.
Because freelance income is subject to self-employment tax on top of regular income tax, many freelancers underestimate their true tax burden when setting rates, effectively taking home less than they planned. Adding an estimated self-employment tax amount to your target-income calculation (see the Self-Employment Tax Calculator) gives a more accurate picture of what your rate actually needs to cover.
The rate this formula produces is the rate you need to hit your target, not necessarily the rate the market will bear for your skill level and niche. If the calculated rate is significantly above what comparable freelancers charge, it's worth revisiting your billable-hours assumption, expense structure, or target income, rather than assuming clients will simply pay a rate the math says you need.
Add your target take-home income, business expenses, and estimated self-employment tax, then divide by your actual annual billable hours, not total working hours, since freelancers rarely bill 100% of their time.
Freelancers spend meaningful time on unbillable work like finding clients, invoicing, administration, and skill development. A billable-hours percentage well below 100% (often 50-75%) is normal and should be built into your rate.
Yes. Software subscriptions, equipment, insurance, and other business costs come out of your revenue before you see take-home income, so they need to be built into the rate, not treated as a separate line item clients see.
Estimate your self-employment tax with the Self-Employment Tax Calculator, or find your break-even point with the Break-Even Calculator.
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