Freelance Hourly Rate Calculator
The rate a freelancer has to charge to reach a target income, once unbillable time, expenses and tax are counted. It usually lands far above the equivalent salaried hourly rate, and it should.
Also called: contractor rate calculator, consulting rate.
$1,913.04 an hour, or $15,304.35 a day. That covers 1,500,000 of take-home, 200,000 of costs and $500,000.00 of tax across 1,150 billable hours.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
Work backwards from what you want to keep. Gross it up for tax, add business expenses, and divide by the hours you can actually bill. Twenty-five billable hours in a forty-hour week is realistic once selling, admin and delivery gaps are counted, so the divisor is much smaller than a salaried year. That is why a freelance rate double the salaried equivalent is often merely break-even.
rate = (income grossed up for tax, plus expenses) / billable hours- T
- Take-home target (currency)
- t
- Tax rate (decimal)
- E
- Business expenses (currency)
Method and limits
What it assumes
- The billable hours entered are hours a client will actually pay for, not hours worked.
- One flat effective tax rate.
What it deliberately does not model
- It does not price the risk of a gap between contracts, which is the largest hidden cost of freelancing.
- Health cover, retirement contributions and equipment belong in expenses and are easy to underestimate.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- Why is my required rate so much higher than my old salary rate?
- Because a salary is paid for every hour of the year including holidays, illness and admin, while a freelance rate is only earned on billable hours. Half your time being unbillable doubles the rate before tax and expenses.