Most freelancers set their hourly rate by taking a salary and dividing it by 2,080 hours. That number is always too low, because it ignores tax, business expenses, and the fact that nobody bills forty hours a week. This calculator works the other way around: you tell it what you want to keep, and it tells you what you need to charge.
How the calculation works
- Your target take-home and business expenses are added together.
- That total is grossed up for tax — divided by one minus your tax rate — to give the revenue you actually need to invoice.
- Your billable hours per week are multiplied by your working weeks to give real annual billable hours.
- Required revenue divided by billable hours gives your minimum rate.
Getting the inputs right
Billable hours are not working hours. This is where most people go wrong. Proposals, invoicing, chasing payments, calls that go nowhere and keeping your skills current are all unpaid. Twenty to thirty billable hours a week is realistic for an established freelancer.
Working weeks are not fifty-two. Subtract vacation, sick days, and the quiet weeks when the pipeline is empty. Forty-six is a sensible planning figure.
Expenses add up faster than expected. Software subscriptions, hardware, hosting, accounting, insurance, courses and platform fees. Most people underestimate this by roughly half.
Tax rates vary by country and by how you are registered, so use your own effective rate rather than a headline figure, and confirm it with an accountant if you are unsure.
What the result means
The number this produces is a floor, not a target. It is the rate at which you break even on the life you said you wanted. Charging below it means quietly funding your clients out of your own savings.
It also says nothing about what your market will pay. If your floor sits above what clients in your niche are paying, that is a positioning problem rather than a pricing one — and dropping the rate does not solve it.
For the full reasoning behind this, including how to raise your rate without losing clients, read how to set your freelance rate in 2026.