Freelance Hourly Rate Calculator

How to use the freelance rate calculator

1. Income you want per year. The amount you want to pay yourself before income tax, the figure you would compare with a salary.
2. Business expenses. Everything the business pays for in a year: software, equipment, a phone, insurance, accounting, platform or payment fees, coworking space, training.
3. Benefits you pay for yourself. Costs an employer would otherwise cover, such as health coverage or savings an employer would match. Enter what you plan to spend.
4. Time. Weeks off for vacation, public holidays and sick days; the hours you work in a typical week; and the share of those hours you can bill to clients.
5. Buffer. An optional percentage of revenue kept back as profit or as a cushion for slow months.

The result is the minimum hourly rate that covers all of it, plus a day rate, the annual revenue needed and the billable hours per year.

The formula

The calculator opens on a worked example. An income goal of $70,000 plus $6,000 of expenses and $9,000 of benefits needs $85,000 of revenue. Six weeks off leaves 46 working weeks; at 40 hours a week that is 1,840 hours, and if 60% can be billed, 1,104 billable hours. The minimum rate is 85,000 ÷ 1,104 = $76.99 an hour, and an 8-hour billed day is $615.94.

Adding a 10% buffer raises revenue to 85,000 ÷ 0.90 = $94,444.44 and the rate to $85.55. The buffer is a share of revenue, not a markup on costs, so 10% of every invoice is left after the bills are paid.

Why the rate is far above salary ÷ 2,080

A full-time employee year is usually counted as 2,080 hours, 40 hours × 52 weeks, and the U.S. Office of Personnel Management uses a 2,087-hour divisor for federal pay. Dividing a $70,000 salary by 2,080 gives $33.65 an hour. The freelance rate in the example is 2.29 times that, and the gap has three causes:

• Unbilled time. An employee is paid for meetings, email and slow afternoons. A freelancer is paid only for billable hours, and finding work, quoting, invoicing and bookkeeping all take time.
• Unpaid time off. An employee’s salary covers paid holidays and vacation. A freelancer’s six weeks off earn nothing.
• Costs the employer used to carry. Equipment, software, insurance and benefits move onto your side of the ledger. Taxes do too: the IRS describes self-employment tax as the Social Security and Medicare tax of people who work for themselves, similar to what is withheld from wage earners’ pay, at a rate of 15.3% that includes an employer-equivalent portion.

The calculator doesn’t estimate any tax. Ask a tax professional what to set aside, and remember that the income goal you enter is before income tax.

The billable share matters most

Of all the inputs, the share of hours you can bill moves the rate the most, because it changes the denominator. With the same $85,000 and 1,840 working hours:

• 50% billable, 920 hours: $92.39 an hour
• 60% billable, 1,104 hours: $76.99
• 75% billable, 1,380 hours: $61.59

New freelancers often assume they will bill nearly every working hour and set a rate that can’t cover their costs. If you don’t know your share yet, track a few weeks of time, including sales and admin, before settling on a number. A long-term contract with one client can push the share up; many small projects push it down.

Day rates, project prices and retainers

Day rate. Multiply the hourly rate by the hours in a billed day. Some clients book by the day and expect a full day of work; others expect around 6 hours of focused time. Set the hours to match what a day means in your contract.

Project price. Estimate the hours, add a contingency for revisions and the unexpected, and multiply by the rate. A job estimated at 30 hours with a 20% contingency is 36 hours; at $85 an hour that is $3,060. Quoting a fixed price rewards accurate estimates and working efficiently, and penalizes optimism.

Retainer. A fixed monthly fee for a set number of hours, say 10 hours at $85, is $850 a month. Because retainers reduce the time spent finding work, some freelancers offer them a little below their project rate.

Costs that are easy to forget

A rate built on too small an expense figure looks fine until the first year’s accounts are done. Go through these when you fill in expenses and benefits:

• Equipment replacement. A $2,400 laptop replaced every three years is $800 a year, even in the years you don’t buy one.
• Software and subscriptions. Design tools, accounting software, cloud storage and a password manager add up quickly when each is billed monthly.
• Insurance. Professional liability, equipment and, for some clients, a required general liability policy.
• Payment and platform fees. A marketplace or card processor that takes a percentage of every invoice is a cost on all your revenue.
• Accounting and legal help, such as a bookkeeper or a contract review.
• Training and conferences that keep your skills current, plus the unbilled days you spend at them.
• Benefits. Health coverage and the retirement savings an employer would otherwise contribute to, as well as any disability or life cover you decide to buy.

Unbilled days, such as conferences, count against your billable share or your weeks off, not as an expense.

Checking the result

Multiply the rate by the billable hours to confirm it covers your costs: $76.99 × 1,104 = $84,996.96, which is $85,000 once you allow for the rate being rounded to the cent. Then check it against the market. If clients in your field pay well above your minimum, you can charge more and build a cushion. If they pay below it, the numbers show which levers you have: more billable hours, lower expenses, fewer weeks off, a smaller income goal, or a niche where clients pay more. Re-run the calculator when your expenses or workload change, at least once a year.

Sources & assumptions

How this calculator gets its numbers. Full method: our methodology.

• Revenue needed = (income goal + business expenses + benefits) ÷ (1 − buffer %).
• Billable hours = (52 − weeks off) × hours per week × billable share.
• Hourly rate = revenue needed ÷ billable hours; day rate = hourly rate × hours in a billed day.
• The income goal is before income tax; no tax of any kind is estimated.
• The 2,080-hour comparison is a full-time employee year (40 × 52) with no unpaid time off.

Sources

1. U.S. Office of Personnel Management, Computing Hourly Rates of Pay Using the 2,087-Hour Divisor. Federal hourly pay is the annual rate divided by 2,087 hours, rounded to the nearest cent; biweekly pay is the hourly rate × 80. Shown here as the alternative to the common 2,080-hour year.
2. Internal Revenue Service, Self-Employment Tax (Social Security and Medicare Taxes). Self-employment tax is the Social Security and Medicare tax of people who work for themselves, at a 15.3% rate that includes an employer-equivalent portion. Cited to explain why the income goal excludes tax; the calculator doesn’t compute any tax.

Last reviewed November 2, 2026. Treat the result as the lowest rate that meets your goal, then check what clients in your field pay.