Build your freelance rate
Use annual amounts for income, benefits, and overhead.
Freelance pricing tutorial
Freelance hourly rate calculator
Work backward from the income you want to keep. Account for taxes, benefits, business overhead, unpaid time, and the fact that not every working hour can be billed to a client.
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Tutorial
How to calculate a freelance hourly rate
The most common pricing mistake is starting with an employee hourly wage and adding a small markup. A freelance business has to fund both your personal compensation and the infrastructure that makes the work possible.
Step 1: choose the take-home income you want
Think about what you want available for personal spending and saving after the planning tax reserve. The calculator grosses that amount up using the reserve percentage you enter.
Step 2: add benefits and retirement
If you want health insurance, disability coverage, retirement contributions, or other benefits to be funded by the business, enter an annual reserve rather than hoping they fit into whatever is left.
Step 3: add business overhead
Include recurring expenses such as software, accounting, insurance, equipment replacement, licensing, education, marketing, and workspace. Do not include a cost twice if it is already inside another reserve.
Step 4: reduce the year to realistic working weeks
Freelancers are generally not paid for vacation or gaps between engagements. If you want four weeks away plus room for holidays and downtime, a value around 46–48 working weeks may be more realistic than 52.
Step 5: estimate billable utilization
If you work 40 hours but only 65% is invoiceable, the business has 26 billable hours per week. The remaining time supports sales, proposals, email, invoicing, administration, learning, scheduling, and other work that clients may not pay for directly.
Step 6: add a pricing cushion if appropriate
The minimum modeled rate covers the assumptions you entered. The target rate adds a cushion for uncertainty, negotiation, scope friction, and imperfect utilization. Market demand may support more—or less.
Worked example
How much should I charge to take home $100,000?
Start with $100,000 desired take-home, a 25% planning tax reserve, $18,000 for benefits and retirement, and $12,000 of overhead. Then assume 46 working weeks, 40 working hours each week, and 65% billable utilization. The calculator first determines the annual revenue requirement and then divides it across realistic billable hours instead of 2,080 employee hours.
Why your market rate can be different
This calculation establishes an economic floor and target based on your business. Your actual price also depends on specialization, client value, urgency, competition, project risk, scarcity, reputation, and whether you sell hours or outcomes. If the market will not support your modeled floor, the solution may be to improve utilization, reduce costs, specialize, change scope, or use a different pricing model.
FAQ
Freelance rate questions
What billable utilization should I use?
Use your own history if available. New freelancers should avoid assuming every working hour is billable. The best value is the percentage you can realistically sustain across a full year.
How do I include vacation?
Reduce working weeks. For example, four weeks away from client work would reduce 52 weeks to no more than 48 before considering holidays, illness, or gaps.
Should I charge the target rate or the minimum rate?
The minimum is the modeled floor under your inputs. The target includes your selected cushion. Neither replaces market research, negotiation, or value-based pricing judgment.