Freelance Hourly Rate Calculator: How Much to Charge, Worked Through

October 13, 2026 · Freelance and creator rates

To work out a freelance hourly rate, start from the money you need to keep, add back the tax you will pay on profit and your business costs, then divide by the hours you can actually invoice - not the hours you work. In the illustrative example below, someone who wants to take home $60,000 a year needs to charge $84.98 an hour. The common shortcut, $60,000 divided by 2,080 hours, says $28.85. That is about 2.9 times too low, and the rest of this page shows exactly where the gap comes from.

The freelance rate formula

revenue needed = take-home target / (1 - tax rate on profit) + overhead

billable hours = (52 - weeks off) x hours a week x billable share

hourly rate    = revenue needed / billable hours

Three things in there do the work:

• Billable share. Selling, quoting, invoicing, email, bookkeeping and the gaps between projects are all working hours no client pays for. Only the billable share of your desk time earns money.
• Tax on profit. An employer withholds tax from a salary. As a freelancer you pay it yourself, out of profit, so the revenue has to be grossed up to leave your target after tax. To compare a contract rate against a salaried job, see the W-2 to 1099 rate calculator.
• Overhead. Software, equipment, insurance, an accountant, any workspace - these come out of revenue before you see a cent.

Worked example

These inputs are illustrative, chosen to show the method. They are not typical figures for any field or country.

The 25% is a placeholder that lumps together whatever income and self-employment taxes apply to you. It is not a real rate for anyone; use the figure your accountant or tax authority gives you.

Billable hours. 46 working weeks at 40 hours is 1,840 desk hours. At 55% billable, that is 1,012 hours you can invoice - 49% of the 2,080 the shortcut assumes. The other 828 hours still get worked; they just are not paid.

Revenue needed. To keep $60,000 after a 25% tax on profit you need $80,000 of profit (the tax takes $20,000). Add $6,000 of overhead and the business has to bring in $86,000.

Rate. $86,000 / 1,012 hours = $84.98 an hour, or $680 for a day of eight billable hours.

Where the shortcut goes wrong, one step at a time

Start from the naive number and add each correction in turn:

The biggest single jump - $26.68 an hour - is not tax and not expenses. It is the unbillable time. Taking out vacation adds only $3.76; overhead adds $5.93. Tax and expenses are the corrections that are easy to remember; the fact that nearly half the desk week is not for sale is the one that is easy to miss.

One tempting mistake runs the other way. Overhead is a business cost, paid before tax is worked out, so it is added after grossing up. If you add it first and gross up the whole lot, you get $86.96 - an overstatement of $1.98 an hour. Small, but it is the kind of error that makes a quote hard to defend.

The input that moves the rate most

Hold everything else fixed and change only the billable share:

Going from 40% billable to 70% billable moves the rate you need from $116.85 to $66.77 - a swing of $50.08 an hour, which is far bigger than the entire overhead line. That is the non-obvious part of freelance pricing. Your rate is less a statement about what your work is worth than a statement about how much of your week you can sell.

It also means there are two ways to make a too-high number workable: raise the rate, or raise the billable share (fewer unpaid pitches, retainers instead of one-offs, less admin). The second often does not need a client to agree to anything.

None of this says what your market will pay. If the number you get is well above what clients in your field accept, that is useful information: the target, the overhead, the billable share or the market has to change. Working below the number quietly is the one option that cannot last.

What a discount really costs

Once you have a rate, discounts look cheap. They are not linear. Cut the rate by a share d and each hour earns less, so you need 1 / (1 - d) times the hours to earn the same:

A 20% discount on the example above needs 25% more billable hours - about 253 extra hours a year - just to stand still. Worth knowing before you agree to one in a sales call.

How to use this on your own numbers

1. Write down the take-home income you need for a year, after tax.
2. List a year of business costs: software, equipment, insurance, fees, accountant, workspace.
3. Get your effective tax rate on profit from an accountant or your tax authority. Do not guess it from an article, including this one.
4. Count the weeks you will not work, including holidays and sick time.
5. Estimate your billable share honestly. If you have tracked time before, use that. If not, track a month - it is the input that matters most.
6. Run the three lines of the formula.

How these were calculated

Billable hours are (52 - weeks off) x hours a week x billable share. Revenue needed is the take-home target divided by (1 - tax rate), plus overhead, because tax falls on profit and overhead is deducted before profit. The rate is revenue needed divided by billable hours. Every figure on this page was computed twice: once by the code behind the products below, and once by an independent program that runs the year forward at a trial rate (invoice, pay overhead, pay tax on profit) and searches for the rate that leaves exactly the target. The two agree to the cent. All inputs are illustrative, the tax rate is a placeholder rather than a real rate, and none of this is financial, legal or tax advice.

If you would rather plug in your own numbers than redo the arithmetic, the calculator pack below runs this floor rate plus the billable-share and discount sums in a spreadsheet, and the second kit pairs the same math with scripts for quoting and holding your rate with clients.