Setting your freelance rate is one of the most critical steps in building a sustainable business. Many new freelancers make the mistake of simply matching their previous salary's hourly equivalent, forgetting that as a freelancer, you are responsible for your own taxes, benefits, and overhead costs.
The "Total Cost of Living" Formula
To calculate a profitable rate, you must work backward from your desired lifestyle. Our calculator uses the following logic:
Desired Net Income: The amount of "take-home" pay you need to cover personal life and savings.
Business Expenses: Software subscriptions, hardware, office space, and marketing.
Tax Liability: Unlike employees, you pay both halves of social security/Medicare in many regions, plus income tax.
Billable vs. Non-Billable: You cannot bill 40 hours a week. Admin, sales, and learning account for about 20-30% of your time.
Example Calculation
If you want to take home $5,000 a month, spend $500 on expenses, and face a 25% tax rate, you actually need a gross income of $7,333.33 per month. If you can only bill 20 hours per week (86 hours per month), your minimum hourly rate must be approximately $85.27.
Why Billable Hours Matter
A standard work year has roughly 2,080 hours. However, a freelancer must account for holidays, sick days, and administrative time. If you calculate your rate based on 40 billable hours but only manage to find 20 hours of client work, you will fall 50% short of your income goals. Always be conservative with your billable hour estimates.
function calculateFreelanceRate() {
var netIncome = parseFloat(document.getElementById('desiredNetIncome').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
var weeklyHours = parseFloat(document.getElementById('billableHours').value);
var taxRate = parseFloat(document.getElementById('taxRate').value);
if (isNaN(netIncome) || isNaN(expenses) || isNaN(weeklyHours) || isNaN(taxRate) || weeklyHours = 1) {
alert("Tax rate must be less than 100%");
return;
}
var monthlyGrossRequired = (netIncome + expenses) / (1 – taxDecimal);
var annualGrossRequired = monthlyGrossRequired * 12;
// Average 4.33 weeks in a month
var monthlyBillableHours = weeklyHours * 4.33;
var hourlyRate = monthlyGrossRequired / monthlyBillableHours;
var dayRate = hourlyRate * 8;
// Display Results
document.getElementById('resHourly').innerText = "$" + hourlyRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resDay').innerText = "$" + dayRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resGross').innerText = "$" + monthlyGrossRequired.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resAnnual').innerText = "$" + annualGrossRequired.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('freelanceResults').style.display = 'block';
}
#freelance-rate-calculator-container input:focus {
outline: none;
border-color: #3498db !important;
box-shadow: 0 0 0 3px rgba(52, 152, 219, 0.2);
}
@media (max-width: 600px) {
#freelance-rate-calculator-container div[style*="grid-template-columns: 1fr 1fr"] {
grid-template-columns: 1fr !important;
}
}