Hourly rate calculator

Freelance hourly rate calculator

Start from the income you want to take home, then add tax, business costs, time off and non-billable hours. The calculator shows the hourly rate you need to charge, and the day rate that comes from it.

✓ Take-home target
✓ Tax & expenses
✓ Billable hours
✓ Day rate too

Your numbers

Target take-home (per year)

Currency

Estimated tax rate

%

Business expenses (per year)

Hours per week

Weeks off per year

Billable share of working time

%

Result

Minimum hourly rate

–

Bill hours →

A planning estimate, not tax advice. Add a margin for risk and value.

How to work out your hourly rate

Enter your target take-home pay. Use the yearly amount you want to keep after tax and business costs.
Add an estimate of tax. Enter a rough percentage for income tax and social contributions. Your accountant can tell you a better figure.
Add business expenses. Include software, equipment, insurance, accounting, travel, co-working and anything else you pay each year.
Set your time. Enter hours per week, weeks off (holiday, sick days and public holidays) and the share of your time you can bill.
Read the rate. The result is the minimum hourly rate that gets you to the target. Add a margin for risk and for the value you deliver.

Why you cannot just divide a salary by 2,080 hours

An employee’s hourly pay assumes paid holidays, sick pay, a pension contribution, equipment and a desk. As a freelancer you pay all of that yourself, and a good part of your week is not billable: finding work, invoicing, learning, answering email and doing your own bookkeeping. If you take a salary and divide by the number of hours in a working year, you will charge too little.

The right way is to start with the income you need and work backwards:

Take your target take-home pay and gross it up for tax: gross = take-home ÷ (1 − tax rate).
Add yearly business expenses to get the revenue you need.
Work out your billable hours: (52 − weeks off) × hours per week × billable share.
Divide: hourly rate = revenue needed ÷ billable hours.

Worked example

Input	Value
Target take-home	50,000
Estimated tax rate	25%
Business expenses	6,000
Hours per week	40
Weeks off (holiday, sickness, public holidays)	6
Billable share of working time	65%

Gross needed: 50,000 ÷ 0.75 = 66,666.67. Revenue needed: 66,666.67 + 6,000 = 72,666.67. Billable hours: 46 weeks × 40 hours × 65% = 1,196 hours. Hourly rate: 72,666.67 ÷ 1,196 = 60.76 per hour, or about 486 for an 8-hour day.

The figure is an estimate. It does not include profit margin, a buffer for slow months, or pension savings beyond your take-home target.

How much of your time is billable?

New freelancers often assume they can bill every hour they work. In practice, 50% to 75% is typical, depending on how much time goes on sales, admin and training. A consultant with a long contract might bill 80% or more. A freelancer who is still building a client list could be nearer 40%. Use your own time records, or a timesheet for a month, to get your real number.

Admin and bookkeeping: invoicing, expenses, tax records.
Business development: proposals, calls, networking, marketing.
Learning and tools: courses, trying new software.
Gaps between projects: time you cannot fill.

Our timesheet invoice generator can help you track hours.

From a cost-based rate to a price

The calculated rate is a floor, the rate below which you lose money relative to your target. Your market rate depends on value, scarcity, demand and what clients pay for similar work. Many freelancers also move away from hourly billing: a fixed project price or a day rate is easier for clients to approve and avoids penalising you for working faster. The day rate calculator shows a day rate from a salary comparison.

Ways to adjust the figure

Add a profit margin of 10% to 30% so the business can grow and absorb slow months.
Charge a premium for rush work or short notice.
Charge a lower retainer rate for guaranteed hours.
Check the market rate for your role and region, for example on public salary surveys or job boards.

Tax, VAT and what the rate leaves out

The tax percentage is only a rough input. It should include income tax and any social contributions, such as self-employment tax in the US or National Insurance in the UK, but not sales tax, VAT or GST that you collect for the government. Those are added on top of your rate if you are registered. The VAT calculator and GST calculator handle that step.

The calculator does not give tax advice. Ask your accountant for a realistic effective rate for your situation, including deductions, allowances and pension contributions.

Glossary

Billable hours: Hours you can invoice a client for.
Utilisation: The share of your working time that is billable.
Take-home pay: Money you keep after tax and business costs.
Overheads: Costs of running the business that are not tied to one project.
Retainer: A fixed fee paid regularly for a set amount of availability or work.

Check official guidance. We could not fully confirm these points against an official page when we last reviewed, so please verify them before relying on them:

The calculator is a planning tool, not tax advice. The tax percentage is your own estimate.

Frequently asked questions

How do I calculate my freelance hourly rate?

Take your target take-home pay and add tax to get the gross income. Add your business expenses to get the revenue needed, then divide by the number of billable hours in a year.

What percentage of my time is billable?

Many freelancers bill 50% to 75% of their working hours. The rest goes on admin, sales, learning and gaps between projects. Track your time for a month to get your real number.

Should I charge hourly or by project?

Hourly billing is simple and fair for open-ended work. Fixed prices suit well-defined projects and reward efficiency. Many freelancers use day rates or retainers too. Choose what matches the scope and the client.

How many weeks off should I include?

Include holidays, public holidays and an allowance for sickness. A typical self-employed person might use 4 to 8 weeks. Be realistic: you do not get paid for time off.

Does the hourly rate include VAT or sales tax?

No. The rate is before any VAT, GST or sales tax. If you are registered, you add it on top of the rate on the invoice.

What tax percentage should I use?

Use an estimate of your effective rate for income tax and social contributions. If unsure, ask an accountant or use your tax authority’s calculator. This tool is not tax advice.

Is the result the rate I should charge?

It is the minimum to meet your target. Market rates, your experience and the value of the work may justify a higher figure.

How do I convert to a day rate?

The result shows an 8-hour day at your hourly rate. For a rate based on a salary comparison, use the day rate calculator.

Can I use this for contractors outside the US?

Yes. The calculation is currency-neutral. Enter amounts in your own currency and use a tax rate that matches your country.

Is my data stored?

It stays in your browser. Nothing is uploaded, and you can reset the form to clear it.