Freelance rate calculator
Work out the minimum freelance hourly rate that covers your income goal, business expenses, tax and unbilled time, plus a profit markup. You also get day, weekly and monthly rates.
Income Goal
This is what you want to earn after expenses and taxes
Business Expenses
Tax Reserve
Include self-employment tax (~15.3%) plus income tax. US freelancers typically set aside 25-35%.
Time & Availability
Time spent on admin, marketing, and unbilled work. Most freelancers are 50-70% billable.
Profit Margin
Buffer for savings, growth and slow periods, applied as a markup on the rate.
Your Rates
Recommended Hourly Rate
$115
per hour
Annual summary
Tip: These are minimums. Charge more for rush work, specialized skills, or high-value projects. Your rate is a starting point, not a ceiling.
Rate context
How the freelance rate is calculated
The calculator works backwards from the income you want to take home. It adds your business expenses, grosses the total up for tax, spreads it over the hours you can actually bill, then adds a profit markup.
Hourly rate = (desired income + monthly expenses x 12) / (1 - tax rate) / billable hours x (1 + profit margin)
- Billable hours = (52 - vacation weeks) x hours per week x billable %.
- Tax reserve = the grossed-up total x tax rate.
- Day rate = hourly rate x 8. Weekly = hourly rate x hours per week x billable %. Monthly = weekly x 4.33.
- Annual billing target = hourly rate x billable hours.
Worked example
With the defaults: $75,000 desired income plus $1,000 a month in expenses is $87,000. Divided by (1 - 30%) for tax, you need $124,286 before tax. Working 48 weeks at 40 hours with 65% billable gives 1,248 billable hours, so the break-even rate is $99.59 (shown as $100). Adding a 15% profit markup gives $115 an hour, a $916 day rate, about $12,893 a month and a $142,929 annual billing target. The tax reserve is $37,286.
How to read the result
The hourly rate is a minimum. Anything below the base rate means you will not reach your income goal after expenses and tax. Two settings move the result most: billable % and tax rate. Dropping billable time from 65% to 50% in the example raises the rate from $115 to about $149, because the same costs are spread over fewer hours.
Two simplifications to know about. The calculator applies the tax rate to expenses as well as income, although business expenses usually reduce taxable income, so the result leans high. And the profit margin is applied as a markup on the rate (rate x 1.15), which produces a margin of about 13% of the final rate, not 15%.
What to include in each input
Desired annual income
What you want to pay yourself before income tax. A useful reference is what an employer would pay for the same role, plus what they would spend on benefits you now cover yourself.
Monthly business expenses
- Health insurance and retirement contributions an employer would have paid
- Software subscriptions and equipment
- Coworking space or home office costs
- Accounting, legal and insurance
- Marketing and professional development
Tax rate
Use your combined rate. In the US, self-employed people pay a 15.3% self-employment tax (12.4% Social Security and 2.9% Medicare, per the IRS) on top of income tax. Ask an accountant for the figure that fits your income and state.
Billable percentage
The share of working hours you can invoice. Sales calls, proposals, admin, bookkeeping and learning are not billable. Check your last three months of timesheets rather than guessing; the utilization rate calculator helps.
Common pricing mistakes
- Copying an employee hourly wage: it ignores benefits, tax and unbilled time
- Assuming 40 billable hours a week: admin and sales time come out of the same week
- Forgetting self-employment tax: it is charged on top of income tax
- No profit: break-even leaves nothing for slow months
- Never reviewing rates: rerun the numbers every year
When to raise your rates
- You are booked out for months ahead
- You have not reviewed rates in a year
- Your skills or results have improved
- You are turning down projects
- Your costs or taxes have gone up
Frequently asked questions
How do I know if my rate is too high or too low?
Start with the minimum from this calculator; below it you lose money against your income goal. Above it, watch your proposal win rate. If you win almost every proposal, you are probably cheap for your market. If you win very few, test a smaller scope or explain the value more clearly before cutting the rate.
Should I charge different rates for different clients?
You can. Rush work, specialized expertise and work with a large business impact all justify a higher rate. Keep one published base rate and adjust upward for those cases rather than discounting below it.
What's better: hourly or project-based pricing?
Project pricing lets you charge for value rather than time, which suits experienced freelancers with predictable work. Hourly suits ongoing work or unclear scope. Either way, use your hourly rate to check that a project fee covers the hours you expect to spend.
How do I handle clients who say I'm too expensive?
Offer a smaller scope that fits their budget instead of a lower rate, explain what the price covers, or decline the work. Cutting the rate for one client makes it harder to hold for the next.
Does the calculator include self-employment tax?
Only through the tax rate you enter. Set it to your combined income tax and self-employment tax rate. In the US, self-employment tax is 15.3% on top of income tax.
Bill the hours you priced
AgencyPro gives you a client portal with invoicing on every plan. Pro adds time tracking, so you can see whether your billable percentage matches the one you priced on.