Why calculate your hourly rate properly
Many beginner freelancers set their hourly rate by comparing it to a salaried employee's wage, forgetting they need to cover their own costs (equipment, software, accounting, taxes) and that not all hours worked are billable — time spent on prospecting, admin work and vacation doesn't generate direct revenue.
How the calculation works
First, we add your desired net income to your monthly business costs, then multiply by 12 to get the required annual revenue. Next, we calculate how many billable hours you actually work per year: weekly hours × (52 − weeks off). The hourly rate is the required annual revenue divided by your annual billable hours.
What counts as "billable hours"
Only count hours you actually bill the client for — don't include time spent on admin emails, prospecting, learning or running your own business, unless you already bill separately for that time.
Adjusting the result
The calculated rate is the minimum needed to cover your goals — consider adding a safety margin for unexpected events, slow months, or future rate increases.
Frequently asked questions
Should I include taxes in my monthly costs?
Yes, include an estimate for taxes and fees in your monthly business costs, since they reduce your available net income.
How many billable hours per week is realistic?
Most freelancers can't bill more than 20 to 30 hours per week, even when working 40+ hours, because some time goes to admin tasks and client prospecting.
What if I charge per project, not per hour?
You can still use this calculator to find your minimum reference hourly rate, then estimate how many hours a project would take to price it properly.
Does this rate already include profit, or just cover costs?
It's based on the desired net income you entered — if you already built a profit margin into that figure, the result reflects it.