How to Calculate Your Freelance Hourly Rate

One of the biggest mistakes new freelancers make is taking their desired annual salary and simply dividing it by 2,080 hours.

If you want to make $60,000 a year, charging $29/hr as a freelancer will actually leave you broke. Why? Because when you are an employee, your company pays for your health insurance, software licenses, paid time off, and half of your payroll taxes. When you freelance, you pay for all of that.

To calculate an accurate freelance hourly rate, you have to account for three things:

1. Unbillable Hours

As a freelancer, you aren't doing paid client work 40 hours a week. You are answering emails, pitching new clients, doing accounting, and updating your portfolio. The industry standard is that only 50% to 60% of your time is actually "billable."

2. Business Expenses & Taxes

You have to pay for your own laptop, internet, software subscriptions, health insurance, and self-employment taxes (which are roughly 15.3% higher than what employees pay).

3. Time Off

If you don't work, you don't get paid. If you want to take 4 weeks of vacation and holidays a year, you need to price that into the other 48 weeks.

The Freelance Rate Formula

To find your true hourly rate, use this formula: (Desired Net Income + Business Expenses + Taxes) ÷ (Total Weeks Worked × Billable Hours Per Week)

Skip the Math

We built a tool to do this instantly. Try our free Freelance Hourly Rate Calculator. Enter your desired income, your expected business expenses, and how much time you spend on admin work, and it will give you the exact minimum hourly rate you need to charge to hit your goals!