Freelance Hourly Rate Calculator
The hourly, day and retainer rate a freelancer or contractor needs from a target income, tax, business costs, benefits, billable share and margin — with sensitivity and an employee-salary comparison.
| Revenue you need per year | — |
|---|---|
| Billable hours per year | — |
| Day rate (8 billable hours) | — |
| Rate without the profit margin | — |
| Monthly retainer equivalent (full-time) | — |
| Rate at 50% / 80% billable | — |
| Project pricing | — |
| Versus an employee salary | — |
In short
Freelance rate = ((target income + benefits) ÷ (1 − tax rate) + business costs) × (1 + margin) ÷ billable hours, where billable hours are typically only 60–70% of hours worked over 46 weeks. A 70,000 take-home target with 25% tax, 6,000 costs, 8,000 benefits and 10% margin at 1,196 billable hours needs about 101 an hour — roughly 3× the equivalent employee's hourly pay.
Who this is for: Freelancers, consultants and contractors setting an hourly, day or retainer rate.
Why your freelance rate must be higher than your old hourly pay
- Unpaid time: holidays, sick days, admin, proposals, chasing invoices and learning — a full-time freelancer typically bills 1,100–1,400 hours a year, not 2,080.
- Costs an employer used to pay: equipment, software, insurance, workspace, accountant, training, marketing.
- Benefits: pension contributions, health cover, income protection, and a buffer for the weeks with no client.
- Tax: self-employed contributions differ from payroll; the target income is after tax, so revenue has to be grossed up.
- Margin: a business that only breaks even cannot survive a slow quarter or reinvest.
Formula: rate = ((target income + benefits) ÷ (1 − tax rate) + costs) × (1 + margin) ÷ billable hours. The usual result is 1.5–2× the equivalent employee's hourly pay.
See also: Salary to Hourly Calculator, Free Invoice Generator — PDF, Any Currency.
Assumptions
- Revenue needed = ((target income + benefits) ÷ (1 − tax rate) + costs) × (1 + margin).
- Billable hours = weeks × hours × billable share; rate = revenue ÷ billable hours; day = 8 hours; retainer = revenue ÷ 12.
- Employee comparison uses salary ÷ (52 × hours) and a 25% on-cost estimate.
Worked example
Revenue needed: (70,000 + 8,000) ÷ 0.75 = 104,000 + 6,000 = 110,000 × 1.1 = 121,000. Billable hours: 46 × 40 × 65% = 1,196. Minimum rate 101.17 an hour, day rate about 809, retainer about 10,083 a month. At 50% billable the rate rises to 131.52; at 80% it falls to 82.20. Against an employee on 70,000 (33.65 an hour at work), that is 3× — high because the billable share, benefits and tax are all carried by one person.
Frequently asked questions
How do I calculate my freelance hourly rate?
Gross up the income you want for tax, add business costs and self-funded benefits, add a margin, and divide by the hours you will actually bill — not the hours you will work.
What percentage of hours is billable?
60–70% for most solo freelancers; agencies plan on 70–80% for delivery staff. New freelancers often bill under 50% while they build a client base.
Should I charge hourly, daily or per project?
Day and project rates are easier to sell and reward efficiency; use the hourly figure internally to price them (hours × rate + contingency).
Does this work for Upwork or Fiverr?
Yes — add the platform fee (10–20%) to the tax field or the margin so it is covered, and set billable share to reflect time spent on proposals.
What is a good freelance hourly rate?
The one that covers your target income, tax, costs, benefits and a margin at the hours you actually bill — typically 1.5–3× the equivalent employee's hourly pay. The market then decides whether that is achievable.
How do I set a day rate?
Multiply the hourly rate by the billable hours in a working day (usually 7–8), and quote days rather than hours.
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