Are you charging enough as a freelancer? Most freelancers underprice because they forget to account for taxes, unpaid admin hours, and business expenses. Our Freelance Hourly Rate Calculator uses the proven formula — (Target Income + Expenses) ÷ (1 − Tax Rate) ÷ Billable Hours — to tell you the minimum rate you must charge to actually reach your income goal.
Freelance Hourly Rate Calculator
The Freelance Rate Formula Explained
Setting your rate by gut feeling or copying a competitor leads to chronic undercharging. The correct approach is to work backwards from what you actually need to earn:
Hourly Rate = (Target Income + Expenses) ÷ (1 − Tax Rate) ÷ Annual Billable Hours
This formula accounts for your take-home income goal, covers all taxes, and factors in every business expense — ensuring you price for real profitability, not just activity.
The 4 Inputs You Must Get Right
| Input | What to Include | Common Mistake |
|---|---|---|
| Target Income | Desired take-home pay after taxes and expenses | Using an employee salary as a direct comparison |
| Business Expenses | Software, hardware, insurance, marketing, training | Forgetting expenses entirely |
| Tax Rate | Self-employment tax (15.3%) + income tax. US: 25–40% effective | Using W-2 employee tax rates instead of self-employment rates |
| Billable Hours | Hours clients actually pay you for — not total working hours | Assuming 40 billable hours/week when reality is 20–25 |
The Billable Hours Trap
This is the single most common freelance pricing mistake. Most freelancers plan for 35–40 billable hours per week but actually bill 20–25. Unpaid working time includes:
- Client communication, emails, and meetings
- Writing proposals, contracts, and scopes of work
- Invoicing, bookkeeping, and tax preparation
- Marketing, networking, and finding new clients
- Professional development and learning new skills
If you assume 40 billable hours but actually bill 25, your effective rate is 37% lower than you planned. Most experienced full-time freelancers plan for 20–28 billable hours per week.
Freelance Rate Table by Income Goal (2026)
| Income Target | 20 hrs/wk billable | 25 hrs/wk billable | 30 hrs/wk billable |
|---|---|---|---|
| $50,000/yr | ~$56/hr | ~$45/hr | ~$37/hr |
| $75,000/yr | ~$83/hr | ~$67/hr | ~$55/hr |
| $100,000/yr | ~$110/hr | ~$89/hr | ~$74/hr |
| $150,000/yr | ~$165/hr | ~$132/hr | ~$110/hr |
Based on 48 working weeks/year, 30% effective tax rate, $3,000 annual business expenses.
Frequently Asked Questions
How do I calculate my freelance hourly rate?
The correct formula is: (Target Annual Income + Annual Business Expenses) divided by (1 minus your effective tax rate), divided by total annual billable hours. Example: ($75,000 + $3,000) ÷ (1 – 0.30) ÷ (25 hrs × 48 weeks) = $93.45/hour minimum rate. This is your break-even — charge more when your market allows.
What tax rate should a US freelancer use?
US freelancers pay self-employment tax of 15.3% (covering Social Security and Medicare) on top of federal and state income tax. Most US freelancers should plan for an effective combined rate of 25–35%. Use 30% as a safe starting estimate if you are unsure of your exact bracket and deductions.
How many billable hours per week is realistic?
Most full-time freelancers realistically bill 20–28 hours per week. The remaining 12–20 hours of their working week go to unpaid business activities: marketing, proposals, emails, invoicing, and professional development. Planning for 25 billable hours per week is a realistic target for most full-time freelancers starting out.
Should I charge hourly or per project as a freelancer?
Project-based pricing is almost always more profitable for experienced freelancers because it rewards efficiency rather than penalizing it. However, start by calculating your hourly rate first — then use it to anchor project prices. If a project takes approximately 10 hours and your minimum rate is $80/hour, your minimum project price is $800. Then add value-based pricing on top based on what the result is worth to the client.
When should I raise my freelance rate?
Raise your rate when you are consistently booked at 80%+ capacity, when you gain significant new skills or credentials, at least once per year to keep pace with inflation, and whenever taking on new clients. Give existing long-term clients 30–60 days advance notice of any rate increase to maintain the relationship.
What expenses should freelancers include in their rate calculation?
Include all costs to run your business: software subscriptions, hardware and equipment, professional liability insurance, home office costs, marketing and advertising, professional development and courses, accounting and tax preparation fees, and any tools or platforms specific to your work. A typical solo freelancer has $2,000–$8,000 in annual business expenses depending on their profession.