How to Calculate Your Freelance Rate
Freelancers routinely underprice themselves by billing on gut feel rather than working backward from an actual income goal. Here's the formula that fixes that.
grossRevenueNeeded = (desired income + expenses) ÷ (1 − tax rate) × (1 + profit buffer); hourlyRate = grossRevenueNeeded ÷ billable hours per year.
Billable hours, not total hours
A freelancer rarely bills 40 hours a week — admin, marketing and unpaid pitching eat into it. Using your realistic billable hours (often 20-30/week, not 40) is what keeps this calculation honest rather than optimistic.
Worked example
Desired income $60,000, 48 working weeks, 25 billable hours/week (1,200 hours/year), $5,000 expenses, 25% tax rate, 10% profit buffer: gross needed = (60,000+5,000)/0.75 × 1.10 ≈ $95,333. Hourly rate = 95,333 ÷ 1,200 ≈ $79.44/hour.
Try Free Web Tools Mentioned in This Guide
Freelance Rate Calculator
Work out the hourly or day rate you need to charge to hit your income goal.
Quarterly Tax Calculator
Estimate US self-employment quarterly tax payments so you're never caught by surprise.
Tax Set-Aside Calculator
Log each payment and instantly see how much to move to savings for taxes.
Frequently Asked Questions
What tax rate should I use in the formula?↓
Your effective tax rate from last year (total tax paid ÷ total income) is a reasonable starting estimate, refined over time as your actual numbers come in.
Should client-facing rates match this exactly?↓
This is your break-even-plus-profit floor — market positioning, experience and demand may justify pricing above it, but rarely below it sustainably.