Freelancer hourly rate calculator
Tax rates and overhead vary significantly by jurisdiction and business structure. Treat these figures as a starting point — consult an accountant before setting rates or making financial commitments.
Find the minimum rate you can charge and still hit your income target — after tax, overhead, and realistic billable hours.
Freelancer hourly rate calculator
Your minimum rate
Required gross revenue
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Billable hours per year
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Minimum rates
Per hour
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Per day
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Per week
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Monthly revenue target
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3-month income reserve to keep
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Recommended cash buffer for project gaps and slow months
Required rate at different billable fractions
| Billable fraction | Billable hrs/yr | Hourly rate | Day rate | Monthly revenue |
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Highlighted row = your current billable fraction input.
Why freelancers undercharge
The most common mistake is dividing desired income by working hours without accounting for non-billable time, taxes, and overhead. A $80/hr freelancer working 2,000 hours sounds like $160,000/year — but 35% of that is taxes ($56,000), $5,000 is overhead, and realistically only 65% of hours are billable, leaving roughly $99,000 gross on 1,300 billable hours, or $76/hr before expenses. After tax and overhead: about $59,000. The rate needed to actually take home $120,000 is significantly higher.
The sensitivity table above is the most useful output: it shows what happens to your required rate as utilisation falls. Going from 75% to 50% billable time doesn't feel dramatic on a weekly basis, but it forces a 50% increase in hourly rate just to stay even. This is why slow periods are so corrosive — they don't just reduce revenue, they increase the rate you need to charge for the remaining work to stay profitable.
About this tool
Enter your desired net annual income, effective tax rate, annual overhead costs, and how many hours per year you can realistically bill. The tool calculates your minimum hourly rate, day rate, and monthly revenue target — plus a sensitivity table showing how your required rate rises as billable utilisation drops, so you can see the true cost of under-booking.
Frequently asked questions
What billable fraction should I use?
The billable fraction is the share of your working time that actually generates client revenue. A realistic solo freelancer figure is 60–70%: the rest is admin, sales calls, proposals, professional development, and unpaid project overhead. Agencies with dedicated business development tend to achieve 70–80%. Using 100% is unrealistic and will underprice your work — you'll be effective billing out administration time at zero and wondering why you're always scrambling.
Should I include self-employment tax in the tax rate?
Yes. In the US, self-employed individuals pay the full 15.3% SE tax (Social Security + Medicare) on top of income tax. At a typical income level for a solo freelancer, total effective tax (income + SE) often lands between 28–40% after the SE deduction. A practical default is 35%. UK sole traders pay Class 4 NICs (9% up to £50,270, 2% above) plus income tax. Include both in your effective rate field.
What counts as overhead?
Any recurring business cost not directly tied to a specific client: software subscriptions, professional insurance (E&O, general liability), accounting fees, hardware depreciation, co-working space, marketing, and professional development. A solo freelancer might spend $3,000–8,000/year; a small agency with staff and office space could be $20,000–50,000+. This tool uses annual overhead — divide your monthly average by 12 to convert if needed.
My required rate seems very high — am I doing something wrong?
Probably not. Most freelancers systematically underestimate how much they need to charge because they calculate based on 40 billable hours × 52 weeks = 2,080 hours, then forget about gaps, admin time, sick days, taxes, and overhead. This tool shows what you actually need. If the rate feels high relative to your market, the real options are: find a market that supports it, specialise to command a premium, reduce your income target, or reduce overhead — not lower the rate until it's unsustainable.
How is a day rate different from multiplying hourly × 8?
A day rate is not just hourly × hours — it's a pricing convention. Many clients book half-days and full days rather than hourly slots, and day rate pricing signals a more senior, project-oriented engagement style. Practically: day rate ≈ hourly × 7–8, accounting for a slightly shorter effective billing day. The tool calculates it as hourly × working hours per day (from your input), which you can adjust downward if you prefer a rounder number.