Freelancer Hourly Rate Calculator
Calculate the hourly rate to charge based on your desired annual income, billable hours, business expenses, and a non-billable time buffer.
$
hrs
52 minus vacation, holidays, and time off
$
Equipment, software, insurance, etc.
%
Admin, marketing, and sick days on top of billable hours
Hourly Rate to Charge
$86.00/hr
Base rate (before buffer): $71.67/hr
Target revenue: $86,000.00 over 1200 billable hours/year
How to Calculate Your Freelance Hourly Rate
Start with your desired annual income and add your annual business expenses (equipment, software, insurance, and other costs of running your freelance business) to find your target revenue. Dividing that by your total billable hours per year (billable hours per week × weeks worked per year) gives a base hourly rate. Finally, a buffer percentage is added on top to cover time you can't bill for — admin work, marketing, proposals, and sick days — since your billable hours are only part of your total working time.
Rate to Charge = Base Rate × (1 + Buffer%)
Example
For an $80,000 target income, $6,000 in annual expenses, 25 billable hours/week over 48 weeks/year (1,200 billable hours), the base rate is ($80,000 + $6,000) ÷ 1,200 ≈ $71.67/hr. With a 20% buffer for non-billable time, the recommended rate to charge is about $86/hr.
Common Use Cases
- Setting an hourly rate when starting out as a freelancer or independent contractor.
- Re-evaluating your rate after expenses or income goals change.
- Comparing what rate is needed to match a previous salaried income.
FAQs
Why isn't billable hours the same as total working hours?
Most freelancers spend a meaningful chunk of their working time on tasks they can't directly bill a client for — finding new clients, sending invoices, bookkeeping, and general admin. The buffer percentage accounts for this so your billable hours still cover your full income goal.
Does this include taxes?
No — this calculates the rate needed to hit your target take-home income after business expenses, but before personal and self-employment taxes. Freelancers typically need to set aside a portion of income separately for taxes; see our Self-Employment Tax Calculator for that estimate.
What buffer percentage should I use?
20% is a common starting point, but it varies by how much non-billable work your business requires. Freelancers who spend a lot of time on marketing or client acquisition may want a higher buffer, while those with steady repeat clients may need less.