Freelance Hourly Rate Calculator
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Minimum Hourly Rate
$0.00
Gross Annual Revenue Needed
$0.00
Total Billable Hours/Year:
0
Total Annual Expenses:
$0
Estimated Tax Buffer:
$0
Why Use a Freelance Hourly Rate Calculator?
Transitioning from a salaried employee to a freelancer requires a fundamental shift in how you view your income. One of the most common mistakes new freelancers make is attempting to match their previous hourly wage directly. This approach often leads to undercharging because it fails to account for the "hidden costs" of running a business.
Unlike a paycheck, your freelance rate must cover not just your salary, but also your health insurance, retirement savings, self-employment taxes, equipment costs, and software subscriptions. Furthermore, you cannot bill for every hour you work; administrative tasks, marketing, and client acquisition are unpaid but necessary activities.
How the Calculation Works
This calculator uses a reverse-engineering method to determine exactly what you need to charge to maintain your desired lifestyle. The logic is as follows:
- Net Income Goal: The actual cash you want in your pocket at the end of the year.
- Overhead & Taxes: We add your business expenses and a tax buffer to find your "Gross Revenue Target".
- Billable Capacity: We calculate how many hours you can realistically sell, subtracting vacation time and non-billable hours.
- Final Rate: Your Gross Revenue Target divided by your Total Billable Hours equals your minimum hourly rate.
Billable vs. Actual Hours
A crucial input in this calculator is "Billable Hours per Week." While a standard work week is 40 hours, most freelancers only bill 20-30 hours. The remaining time is spent on invoicing, emails, updating portfolios, and finding new clients. If you calculate your rate based on a 40-hour billable week, you will likely fall short of your income goals. A safe rule of thumb is to assume 50-60% of your working time is billable.
function calculateFreelanceRate() {
// Get input values
var targetSalary = document.getElementById('targetSalary').value;
var monthlyExpenses = document.getElementById('monthlyExpenses').value;
var billableHours = document.getElementById('billableHours').value;
var weeksOff = document.getElementById('weeksOff').value;
var taxRate = document.getElementById('taxRate').value;
// Validation
if (!targetSalary || !billableHours) {
alert("Please fill in at least the Desired Salary and Billable Hours.");
return;
}
// Parse values to floats
var salary = parseFloat(targetSalary);
var expenses = parseFloat(monthlyExpenses) || 0;
var hoursPerWeek = parseFloat(billableHours);
var vacationWeeks = parseFloat(weeksOff) || 0;
var taxPercent = parseFloat(taxRate) || 0;
// Logic
// 1. Calculate Annual Expenses
var annualExpenses = expenses * 12;
// 2. Calculate Total Net Needed (Salary + Expenses)
// Note: Expenses are pre-tax usually, but for simplicity in this specific "Net Income" goal model:
// We assume the user wants 'salary' in pocket.
// Gross Revenue = (Salary + Expenses) / (1 – TaxRate) is a common simplification,
// but technically expenses reduce taxable income.
// Better Formula:
// Taxable Income = Revenue – Expenses
// Net Income = Taxable Income – (Taxable Income * TaxRate)
// Net Income = (Revenue – Expenses) * (1 – TaxRate)
// Revenue – Expenses = Net Income / (1 – TaxRate)
// Revenue = (Net Income / (1 – TaxRate)) + Expenses
var taxDecimal = taxPercent / 100;
var divisor = 1 – taxDecimal;
// Prevent division by zero if tax is 100% (unlikely but possible edge case)
if (divisor <= 0) divisor = 0.01;
var revenueNeededForSalary = salary / divisor;
var grossRevenue = revenueNeededForSalary + annualExpenses;
// Calculate tax amount for display
var estimatedTax = grossRevenue – annualExpenses – salary;
// 3. Calculate Billable Hours per Year
var workingWeeks = 52 – vacationWeeks;
var totalBillableHours = workingWeeks * hoursPerWeek;
// Prevent division by zero for hours
if (totalBillableHours <= 0) {
alert("Total billable hours cannot be zero or negative. Please adjust weeks off or hours per week.");
return;
}
// 4. Calculate Hourly Rate
var hourlyRate = grossRevenue / totalBillableHours;
// Update UI
document.getElementById('resultsArea').style.opacity = '1';
document.getElementById('hourlyRateResult').innerText = '$' + hourlyRate.toFixed(2);
document.getElementById('grossRevenueResult').innerText = '$' + grossRevenue.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalHoursResult').innerText = totalBillableHours.toFixed(0);
document.getElementById('annualExpensesResult').innerText = '$' + annualExpenses.toLocaleString('en-US');
document.getElementById('taxBufferResult').innerText = '$' + estimatedTax.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}