Freelance hourly rate calculator: why $50/hr isn't $50/hr
The most common pricing mistake new freelancers make is dividing the salary they want by 2,080 (40 hours × 52 weeks). That number assumes you bill every working hour of every week, pay no tax out of it, and have no costs. None of that is true. Use the calculator below, then read on for the formula so you can sanity-check it yourself.
Works in any currency. Runs entirely in your browser; nothing is sent anywhere.
The formula
Work backwards from what you want to keep:
Billable hours = (52 − weeks off) × hours per week × billable % Revenue needed = expenses + take-home goal ÷ (1 − tax set-aside %) Hourly rate = revenue needed ÷ billable hours × (1 + buffer %)
Expenses are added outside the tax gross-up because in most systems business costs are deducted before profit is taxed. If that isn't how it works where you live, your accountant can tell you which set-aside percentage to use; this calculator is a planning aid, not tax advice.
Worked example
With the default numbers ($60,000 take-home, $6,000 of expenses, 25% set aside, 6 weeks off, 40-hour weeks, 60% billable):
| Step | Result |
|---|---|
| Billable hours: 46 × 40 × 60% | 1,104 hours |
| Revenue: $6,000 + $60,000 ÷ 0.75 | $86,000 |
| Hourly rate: $86,000 ÷ 1,104 | about $78/hr |
| Day rate (8 hours) | about $623 |
| The "salary ÷ 2,080" guess | about $29/hr |
And the headline example: if you charged $50/hr in that same situation you would bill $55,200, keep $49,200 after expenses, and about $36,900 after a 25% set-aside. That's the gap between a rate that sounds fine and one that actually pays you.
Why billable % matters most
Hours spent on sales calls, proposals, invoicing, admin, learning and chasing late payments are real work that nobody pays for directly. For many solo freelancers 50–70% billable is realistic; if you're just starting and still finding clients it can be much lower. Try changing the billable share in the calculator: it moves the rate more than any other input.
Hourly, day or project pricing?
- Hourly is easiest when scope is fuzzy, but it caps what you earn as you get faster.
- Day rate reduces micro-tracking and suits on-site or block-booked work.
- Project price: estimate hours, multiply by your rate, then add a risk buffer (10–30%) for revisions and unknowns. Once you're quick at a task, this is where your rate can grow.
Whatever you choose, the hourly number above is your floor. Quote at or above it, and track actual hours so you can see your effective rate on fixed-price jobs.
Check your real effective rate over time
A target rate is a plan; your effective rate is what you actually earned per hour worked. To see it, you need invoices, expenses and time in one place. You can build that in any spreadsheet with SUMIFS on income and hours by month, or use a ready-made one.