Freelance Hourly Rate Calculator — the Rate Your Income Needs

How to use the freelance hourly rate calculator

1. Enter the Take-home income you want per year (after tax).
2. Add your Business costs per year and the Tax on your profit as a percentage.
3. Set your Working days per week and Working hours per day.
4. Enter your Holiday days per year, Public holidays and Sick days.
5. Move the Billable share of working time slider to match how much of your day clients pay for. Add a Safety margin on top if you want a buffer, and pick your Currency.
6. Read your minimum hourly rate, day rate and the revenue you need. The table shows the rate at other billable shares.

What it does and when to use it

An employee’s salary is paid for every working day, including holidays. A freelancer is only paid for billable hours, and pays their own costs and taxes out of that. That is why dividing a salary you used to earn by 2,080 hours gives a rate that is far too low.

This calculator works backwards from the life you want to fund. Use it when you:

• go freelance and need a starting rate;
• review your prices each year as costs and taxes change;
• decide whether a client’s budget is worth taking;
• compare working four days a week with five.

How it works

The calculator does four steps:

1. Pre-tax profit needed = take-home income ÷ (1 − tax rate).
2. Revenue needed = (pre-tax profit + business costs) × (1 + safety margin).
3. Billable hours = (52 × days per week − holidays − public holidays − sick days) × hours per day × billable share.
4. Minimum hourly rate = revenue needed ÷ billable hours, and day rate = hourly rate × hours per day.

The tax rate is one number you choose, because tax depends on your country, your business structure and your other income. The calculator does not use tax tables. For context:

• In the US, the IRS sets self-employment tax at 15.3% (12.4% Social Security and 2.9% Medicare) once net self-employment earnings reach $400. Income tax comes on top, though you can deduct the employer-equivalent part of self-employment tax when you work out adjusted gross income.
• In the UK, for 2026 to 2027 GOV.UK lists Class 4 National Insurance at 6% on profits from £12,570 to £50,270 and 2% above that, alongside Income Tax.

Your effective rate is the total of these taxes divided by your profit, which is usually lower than your top rate.

Worked examples

The default case. You want $60,000 after tax. At 25% tax you need $60,000 ÷ 0.75 = $80,000 before tax. Add $10,000 of costs: $90,000 of revenue. Five days a week is 260 days; minus 25 holiday days, 8 public holidays and 5 sick days leaves 222 working days, or 1,776 hours at 8 hours a day. At 60% billable that is 1,065.6 hours. $90,000 ÷ 1,065.6 = $84.46 an hour, or a day rate of $675.68.

A four-day week. $40,000 take-home at 20% tax needs $50,000, plus $5,000 costs = $55,000. Four 7-hour days, minus 20 days off, gives 188 days and 1,316 hours. At 75% billable that is 987 hours, so the rate is $55.72 an hour.

Adding a safety margin. Freelance income is uneven, and clients sometimes pay late. A 10% margin on the default case lifts the revenue target to $99,000 and the rate to $92.91 an hour.

How billable time changes everything. In the default case, moving from 60% to 80% billable cuts the rate from $84.46 to $63.34. Moving down to 40% raises it to $126.69. The time you spend on admin and finding work has a real price.

Hourly rate or day rate?

Some clients prefer a day rate because it is simpler to budget, and some freelancers prefer it because short tasks do not get cut into small billable slices. The calculator gives both from the same numbers: the day rate is the hourly rate times your working hours per day. If you quote by the day, agree what a day means, such as the number of hours and whether travel counts. If you quote by the project, estimate the hours honestly, add room for feedback rounds, and keep track of the real time spent so your next estimate is better.

Limits and tips

• This is a floor, not a price. Check what clients in your field pay, and price by value where you can.
• Fees come off the top. Platforms and payment providers take a share of what clients pay. Check the PayPal fee calculator or Stripe fee calculator and build the cost into your rate or invoices.
• Unpaid time counts. If you offer free revisions or discovery calls, lower the billable share rather than ignoring them.
• Retirement and savings are not in the defaults. Add pension contributions to business costs, or use the safety margin.
• Bill clearly. Once your rate is set, the invoice generator creates a clean invoice, and the break-even calculator shows how many billable days a month cover your fixed costs.

This calculator gives an estimate for planning. It is not tax, legal or financial advice.