Freelance Hourly Rate Calculator
$115.74 per hour
Charge this to take home $100,000.00 a year at 30 billable hours a week.
- Day rate (8 hours)
- $925.92
- Revenue you need to bill
- $166,666.67
- Billable hours a year
- 1,440
How this is calculated
Most rate calculators divide a salary by 2,080 hours and stop there. That answer is always too low, for three reasons. First, you are not billable for every hour you work: admin, sales, invoicing and dead time between projects all consume paid hours you cannot charge for, which is why this tool asks for billable hours a week rather than hours worked. Second, you carry costs an employee does not, including software, insurance, equipment, accounting and pension contributions, all of which come out of revenue before you see any of it. Third, nobody withholds your tax for you. So the calculation runs backwards from what you want to keep. It grosses your target income up by your tax rate and again by your overhead rate to find the revenue you must actually bill, then divides that revenue by your genuine annual billable hours to give the rate that gets you there.
Worked example
Thirty billable hours across forty-eight weeks is 1,440 billable hours a year, not 2,080. Keeping $100,000 after 25% tax and 20% costs means billing $166,666.67 of revenue. Divided across 1,440 hours, that is $115.74 an hour, which is a long way from the $48 an hour you would get by dividing $100,000 by 2,080.
Inputs: 100,000 target income, 30 billable hours a week, 48 working weeks, 20% business costs, 25% tax
Result: $115.74 an hour, or a $925.92 day rate
What this assumes
- Business costs and tax are entered as flat percentages of revenue, which is an estimate rather than a tax calculation.
- Every billable hour you enter is actually billed and actually paid.
- A day rate assumes an eight hour day.
Questions
- Why is this higher than my old salary divided by 2,080?
- Because 2,080 hours assumes every working hour is billable, that you have no business costs, and that someone else pays your tax. None of those are true for a freelancer, and correcting for all three is most of the gap.
- What should I put for business costs?
- Add up software subscriptions, insurance, equipment, accounting fees, pension contributions and anything else the work requires, then express it as a share of your expected revenue. Ten to twenty-five percent is common for solo service work.
- Does this include sales tax or VAT?
- No. This is the rate you charge before any sales tax or VAT, which is added on top of your rate and passed on rather than kept.