Why most freelancers under-charge
The classic mistake is dividing salary by 2,080 hours like a salaried job. Freelancers don't get paid for sales calls, admin, learning, sick days, or vacation. Subtract those and the real billable number is closer to 1,000–1,200 hours a year.
- • Bill for the hour, plan for the year.
- • Add 25–35% on top to cover self-employment tax and software.
- • Re-run this calculator every time expenses or target salary change.
How to use the result
The hourly rate is the floor — the minimum you can charge to hit your goals. For project pricing, multiply by an estimated hours range and add a 20–40% buffer for scope drift.
Most freelance hourly rate calculators just divide your salary target by 2,080 and call it a day. That's how new freelancers end up under-billing for years. This calculator works backwards from your real take-home goal, accounts for taxes and overhead, and only counts the hours you can actually bill — not the ones you spend on sales calls, admin, learning, and recovery.
What each input means
Get these inputs right and the output is reliable. Get them wrong and the calculator just multiplies bad assumptions.
Target take-home salary
What you want to keep after tax, expenses, and self-employment costs.
Typical range: $60k–$150k for solo consultants in the US/EU; $80k–$200k for senior specialists.
Annual business expenses
Software, accountant, insurance, co-working, equipment, ads, contractors.
Typical range: $3k–$15k for solos; $20k+ once you hire VAs or buy ad inventory.
Effective tax rate
Self-employment + federal + state. Use last year's actual rate if you have it.
Typical range: 25–40% in the US (15.3% SE tax + brackets); 30–48% in the UK/EU.
Billable hours per week
Hours invoiced to clients — not hours at your desk.
Typical range: 20–28 for full-time freelancers. Hitting 35+ means you're either overbooked or underestimating admin.
Working weeks per year
52 minus PTO, holidays, sick days, conferences, slow weeks.
Typical range: 44–48 for most. Drop below 44 if you take a real summer or have kids.
Worked examples
Real scenarios with the math walked through line by line.
Mid-career designer, $90k take-home
Scenario: Solo product designer, $90k target, $6k expenses, 28% tax, 25 billable hours, 46 working weeks.
Math: Gross needed = ($90k + $6k) ÷ (1 − 0.28) = $133.3k. Billable hours = 25 × 46 = 1,150. Rate = $133,333 ÷ 1,150 ≈ $116/hr.
Outcome: Floor rate ~$116/hr. Charge $135–150 for retainers and projects to absorb scope drift.
Senior dev consultant, $180k target
Scenario: Senior staff engineer going independent, $180k take-home, $12k expenses, 35% tax, 22 billable hrs/wk, 44 weeks.
Math: Gross = $192k ÷ 0.65 = $295.4k. Hours = 22 × 44 = 968. Rate = $305/hr.
Outcome: Quote $325–400/hr. The market sustains it for senior engineers — under-pricing kills perceived seniority.
Common mistakes
Where this calculation usually goes wrong in the real world.
- Using 2,080 hours like a salaried W-2 job — you'll under-bill by 40%.
- Forgetting self-employment tax (15.3% in the US, on top of income tax).
- Not adding overhead — software stack alone is often $200–500/month.
- Quoting your floor rate. The floor is what you need; quote 20–40% higher and absorb negotiation.
- Re-using the same rate for years. Re-run this every January and after every $5k+ expense change.
When to use this calculator
- Setting your hourly rate for the first time.
- Deciding whether a project budget is worth taking.
- Pricing a fixed-bid project (multiply by estimated hours, add 25–40% buffer).
- Deciding whether to hire a contractor or VA (if their rate < your floor, it's likely worth it).
Glossary
Billable hours
Hours you can invoice a client. Usually 50–65% of total work hours after admin, sales, and learning.
Self-employment tax (US)
15.3% covering Social Security and Medicare. W-2 employees split this with employers; freelancers pay both halves.
Effective tax rate
Total tax paid divided by gross income — your blended rate across brackets, not your top bracket.
Gross-up
Working backwards from take-home to figure out what you must invoice before tax.
More questions answered
What's the difference between hourly rate and project rate?
Hourly rate is your time floor. Project rate should multiply estimated hours by your hourly rate, then add 20–40% for scope creep, revisions, and async coordination — and never less than 1.5x your hourly minimum.
Should I lower my rate to win more clients?
Almost never. Lower rates attract higher-maintenance clients with smaller budgets. Better to raise the rate and reduce the funnel — fewer, better clients at higher pay.
How do I raise my freelance rate with existing clients?
Re-run this calculator, then give 30–60 days' notice in writing with the new rate effective on a clean date (start of quarter/year). Don't apologize. Most clients accept reasonable increases tied to scope.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
How to Set Your Freelance Hourly Rate (Without Underpricing Yourself)
A step-by-step framework for pricing freelance work — covering desired salary, real billable hours, business expenses, and the markup most freelancers forget.
Read the guideAgency Pricing Models: Hourly, Retainer, Project, or Performance
The four agency pricing models compared on margin, scalability, client risk, and team economics — with a framework for choosing the right one at each stage.
Read the guideMethodology last reviewed: 2025-11 by the RevenueLab editorial team.
FAQ
What hourly rate should a freelancer charge?
There's no universal number — it depends on your salary target, expenses, taxes, and how many hours you can realistically bill. This calculator gives you the minimum hourly rate that actually hits your goals.
How many billable hours should I plan for?
Most full-time freelancers bill 20–30 hours a week, not 40. The rest goes to sales, admin, learning, and recovery. Use the lower end if you're newer to client work.
Should I include taxes in my freelance rate?
Yes. Self-employment tax (US ~15.3%) plus income tax can take 25–40% of gross. Always price from gross-needed, not take-home.