How to Calculate Your Hourly Rate as a Freelancer

Stop pulling numbers out of thin air. Here is the mathematical way to determine price.

The "Reverse Salary" Method

Most employees look at an annual salary (e.g., $60,000) and assume they can just divide that by 2,080 (40 hours x 52 weeks) to get their hourly rate ($28.84). This is wrong for freelancers.

As a freelancer, you don't get paid for holidays, sick days, or lunch breaks. You also pay your own employment taxes. If you charge $28/hr as a freelancer, you are effectively earning minimum wage after costs.

Step 1: Determine Your Adjusted Annual Goal

Start with the salary you want to earn. Let's say $75,000.

• Add Overhead: Add 10-15% for equipment, software, and insurance.
• Add Profit: Add 20% for savings and business growth.
• Add Taxes: Add 25-30% for self-employment tax.

Step 2: Determine Your Actual Billable Hours

You cannot bill 40 hours a week. realistically:

• Total Weeks: 52
• Minus Vacation: -2 weeks
• Minus Sick/Personal: -2 weeks
• Minus Holidays: -1 week
• Working Weeks: 47 weeks

Now, weekly hours. You spend 10-15 hours on admin/marketing. You likely have only 25 billable hours per week.

47 weeks × 25 hours = 1,175 Billable Hours per Year.

Step 3: The Calculation

Divide your Total Financial Goal by Total Billable Hours.

If you need $100,000 (after adding costs to your $75k salary) and have 1,175 hours:

$100,000 ÷ 1,175 = $85.10 per hour.

Use our Calculator to do this math instantly.