Freelance Rate Calculator: What to Charge Per Hour

I Spent Three Months Undercharging and Didn't Even Know It

When I first went freelance — this was back in 2018 — I just kind of picked a number. I'd been making around 65,000 a year at my salaried job, so I divided that by 2,080 (that's 40 hours times 52 weeks, if you're curious) and got about 31 an hour. So that's what I charged.

Terrible idea.

I mean, it felt logical at the time. But I was forgetting about self-employment taxes, health insurance, the fact that I wasn't billing 40 hours a week (more like 25 on a good week), software subscriptions, my accountant, and honestly a dozen other things that my employer used to quietly cover. After about three months I sat down and actually ran the numbers and realized I was effectively making less than 19 an hour. That was a rough afternoon.

So yeah, this post is basically everything I wish someone had told me before I threw out a number and started losing money while feeling productive.

The Actual Math Behind Your Freelance Rate

Here's the thing most people get wrong: they start with what they want to make. Which, fine, that's part of it. But the real starting point is what you need to make, after you account for all the stuff that eats into your gross revenue before you ever see a dime of it.

Let me walk through this step by step, because once you see the formula it's honestly kind of obvious — but almost nobody does it this way.

That last variable is the one that trips everyone up. You might work 45 hours a week, but between admin, invoicing, marketing yourself, dealing with emails, and the occasional afternoon where you just stare at the wall questioning your life choices — you're probably billing somewhere between 20 and 30 hours. I usually tell people to estimate 25 billable hours per week as a starting point, and then subtract vacation time and sick days (because nobody's paying you for those anymore).

So let's say 25 hours × 48 working weeks = 1,200 billable hours a year.

Now let's run a real example. Say you want to take home 75,000. Your annual business expenses come to about 12,000 (insurance, software, a coworking space membership, whatever). And you estimate your tax burden at around 30% of your gross income.

You need your gross to cover 75,000 + 12,000 = 87,000 after taxes. If taxes are 30%, then 87,000 is 70% of your gross. So gross = 87,000 ÷ 0.70 = about 124,286. Divide that by 1,200 billable hours and you get roughly 104 per hour.

That number shocks people.

It shocked me too, the first time I did this math. But it's real. And if you're charging 50 an hour thinking you're doing fine, you might want to

What Those Numbers Actually Look Like, Side by Side

I put together a quick comparison table because I think seeing a few different scenarios next to each other makes the gap between "what you charge" and "what you keep" really visceral.

Look at the difference between 1,200 and 1,000 billable hours at the same income target. That 200-hour gap (which is basically one fewer billable hour per day) adds 20-30 per hour to your required rate. It's wild how sensitive the whole thing is to billable utilization.

And this is why I always tell people: track your time obsessively for at least a month before you set your rate. You need real data on how many hours you're actually billing, not a guess. Our

But What If Clients Won't Pay That?

This is the question, right? You run the formula, you get 104 an hour, and then some potential client says their budget is 45 an hour and you panic.

A few thoughts on this, and I'm speaking from experience here because I've been on both sides of this conversation.

First — not every client is your client. I know that sounds like motivational poster stuff, but it's genuinely true. If someone can't afford your rate, that's not a reflection of your value, it's a reflection of their budget. Those are different things. I spent a year chasing low-budget clients and burning myself out trying to make the volume work, and it just.. doesn't. The math doesn't math, as the kids say.

Second, consider project-based pricing instead of hourly. Once you know your hourly rate (and you should always know it, even if you never show it to a client), you can estimate how long a project will take, multiply it out, add a buffer for scope creep (I usually add 15-20%), and quote a flat fee. Clients often prefer this because it gives them cost certainty, and you benefit because as you get faster and more efficient, your effective hourly rate goes up. Our

Third — and this one took me a while to internalize — raising your rate doesn't lose you as many clients as you think it will. I bumped my rate by about 30% in 2020 and lost maybe two clients. The rest just.. paid it. Some didn't even comment on it. I'd been undercharging and they knew it.

If you're trying to figure out whether your business can sustain a rate increase or a slow month, running some scenarios through a

A Few Things People Forget to Include in Expenses

Quick list, because I see these get missed all the time:

• Retirement contributions — nobody's matching your 401k anymore, and if you're not saving at least 10-15% of your income you're going to have a bad time in 30 years
• Professional liability insurance (depending on your field)
• Continuing education, courses, conferences
• The unpaid time between contracts — basically, you need to build a buffer into your rate for the months where work dries up
• Equipment depreciation — that laptop won't last forever

I'd also recommend using a

And if you're doing any kind of consulting where you're helping clients with their own

One more thing: revisit your rate every six months. Expenses change. Your efficiency changes. The market changes. I set a calendar reminder and actually do the math again, usually with our