A freelance rate has to cover more than an employee's wage: your own taxes, business expenses, unpaid admin time and time off. The simplest reliable method is to work backwards from the income you want.
This is what you want to keep for yourself in a year after business costs and taxes: what you'd need to cover your living costs and savings.
Software, equipment, insurance, phone and internet share, coworking or home office costs, accounting fees, marketing, training, and health insurance if you pay your own. Monthly costs × 12.
Self-employed people in the US pay income tax plus self-employment tax (Social Security and Medicare, 15.3% on most net earnings), and usually pay it quarterly. Pick an approximate combined rate for your situation; the quarterly estimated tax calculator can help you get a rough figure. If you want to keep T after a tax rate r, you need a profit of about T ÷ (1 − r).
Start with working weeks (52 minus vacation, holidays and sick days), multiply by the hours you work per week, then by the share of those hours you can actually bill. Admin, sales, invoicing and learning are unbilled; many freelancers bill well under 100% of their working time.
Billable hours = (52 − weeks off) × hours per week × billable %
Revenue needed = target take-home ÷ (1 − tax rate) + yearly expenses Hourly rate = revenue needed ÷ billable hours
These numbers are illustrative only. Target take-home $60,000, expenses $8,000, tax rate 25%, 6 weeks off, 40 hours a week, 60% billable:
Profit needed = 60,000 ÷ 0.75 = $80,000 Revenue needed = 80,000 + 8,000 = $88,000 Billable hours = 46 × 40 × 0.60 = 1,104 Hourly rate = 88,000 ÷ 1,104 ≈ $79.71
The calculation gives your minimum sustainable rate. Compare it with what clients in your field and area pay. If the market rate is far below, look at your billable share, expenses or niche; if it's above, you can charge more than the minimum.
Not tax or financial advice. Tax rates here are rough planning numbers; check with a tax professional for your situation.
Revenue needed = target take-home ÷ (1 − tax rate) + yearly expenses; then divide it by your billable hours per year.
(52 − weeks off) × hours per week × the share you can actually bill. Admin, sales and invoicing are unbilled, so many freelancers bill well under 100% of their time.
It has to cover your own taxes, including self-employment tax, business expenses, unpaid admin time and time off.
Skip the math: the free Freelance Hourly Rate Calculator does this in your browser. Nothing is uploaded.