Freelance Hourly Rate Calculator
Work backwards from the income you want to the hourly rate you have to charge, once unbillable time, expenses, and self-employment tax are taken out.
Your details
Software, insurance, equipment, accounting, marketing
Holiday, sick days, and public holidays combined
Details
Admin, sales, invoicing, and dead time are not billable
Federal plus state, as a share of business profit
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
Charge at least
$106.78 / hour
1,196 billable hours a year out of 1,840 worked — $127,704 of revenue
Includes your inputs, the full breakdown, and every row of the table.
Day rate
$854
8 billable hours
Revenue you need
$127,704
Billable hours a year
1,196
65% of 1,840
Employee-equivalent salary
$115,704
Before tax, for comparison
- Revenue billed
- $127,704
- Less business expenses
- − $12,000
- Less self-employment tax
- − $16,348
- Less income tax
- − $19,355
- Take-home pay
- $80,000
| Item | Amount | Per billable hour |
|---|---|---|
| Take-home pay | $80,000 | $66.89 |
| Self-employment tax | $16,348 | $13.67 |
| Income tax | $19,355 | $16.18 |
| Business expenses | $12,000 | $10.03 |
| Total | $127,704 | $106.78 |
What this means
- Only 65% of your hours are billable here, so every billable hour has to carry the unbillable ones. Dropping from 65% to 50% billable raises the required rate by nearly a third without changing anything else about the business.
- Self-employment tax is 15.3% on 92.35% of net earnings, covering both halves of Social Security and Medicare. An employee pays half this and their employer pays the other half; a freelancer pays both, which is the single biggest reason a contract rate has to exceed the equivalent salary.
- The Social Security portion stops at the wage base and the Medicare portion does not, so effective self-employment tax falls at higher incomes. This calculator applies the full 15.3%, which is slightly conservative above the wage base.
- Nothing here covers unpaid invoices, a slow quarter, or the cost of your own health insurance beyond what you entered as expenses. Treat the result as a floor rather than a target.
How the freelance hourly rate calculation works
The most common freelance pricing mistake is dividing a desired salary by 2,080 hours. That number assumes every working hour is paid, that no tax beyond an employee's is due, and that the business has no costs. All three are wrong, and together they produce a rate that quietly loses money.
Start with unbillable time. Sales calls, proposals, invoicing, bookkeeping, software updates, and the gaps between projects are all real work that no client pays for. A well-run solo practice bills somewhere between 50% and 70% of its working hours; the rest is overhead you carry yourself. Every unbillable hour has to be paid for by a billable one, so a 60% billable rate means your effective hourly cost is nearly double what the invoice says.
Then there is self-employment tax. An employee and their employer each pay 7.65% toward Social Security and Medicare. A freelancer is both, so the combined 15.3% lands entirely on them, applied to 92.35% of net earnings. Half of it is deductible against income tax, which softens the blow, but it is still the largest single reason a contractor's rate must exceed the salary it replaces.
Finally, expenses come out before you do. Software subscriptions, liability insurance, health insurance, a laptop every three years, an accountant, and a phone are all paid out of revenue. Working backwards — from take-home, through tax, through expenses, and divided by genuinely billable hours — is the only order that produces a rate you can live on.
Frequently asked questions
How do I convert a salary into a freelance rate?
A rough rule is to divide the salary by 1,000 to get an hourly rate, so a $90,000 salary suggests about $90 an hour. It works because it happens to bake in roughly 60% billable time, self-employment tax, and modest expenses. This calculator does the same thing explicitly, which lets you change the assumptions when yours differ.
What percentage of my hours will actually be billable?
Most established freelancers land between 50% and 70%. Below 50% usually means too much time on sales or admin relative to delivery. Above 75% is rare and generally means either a long retainer that removes the sales burden, or unbilled work that is quietly being given away.
Should I charge hourly or a fixed project price?
Fixed pricing is usually better for both sides once you can estimate reliably, because it rewards you for working efficiently rather than penalising you. The hourly figure remains the number you build the quote from: estimate the hours, apply this rate, then add a margin for the risk that the estimate is wrong.
Does this include health insurance?
Only if you put it in the business expenses figure, and you should. It is one of the largest costs of self-employment in the US, and self-employed people can generally deduct their premiums. Leaving it out is a common way to end up with a rate that looks adequate and is not.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.