Hourly Rate Calculator

Start with your desired take-home income (annual). This is the money in your pocket after taxes and expenses. Be honest — most freelancers undershoot here because they compare to their W-2 salary, forgetting that they will be paying both halves of FICA (15.3%) and providing their own benefits.

Add your annual business expenses: software, equipment, insurance, professional services (accountant), coworking, marketing, education. Then enter your estimated tax rate (default 30% is reasonable for most freelancers in mid-cost states).

The most important inputs are your billable hours per week and weeks worked per year. We default to 25 hours per week and 48 weeks per year — not because that is what you "should" work, but because freelancers spend significant time on admin, marketing, sales calls, and unbillable client communication. If you bill 40 hours every week, you are either burning out or measuring incorrectly.

The profit margin slider adds a buffer on top of everything else — a cushion for slow months, growth investment, or just margin of safety. 10–20% is typical.

The hourly rate is what you need to charge to hit your income goal, with realistic assumptions baked in. The breakdown table shows how it builds up: your take-home target, plus expenses, plus a gross-up for taxes, plus your profit cushion — all divided by your annual billable hours.

Compare this rate to your old W-2 salary divided by 2,080 (the standard work hours per year). Freelance rates are almost always significantly higher, and this is why: you are covering taxes, benefits, retirement, sick days, equipment, software, and the gap between projects out of every billable hour.

A useful sanity check: take your target W-2 equivalent salary and divide by 1,000. A $100,000 W-2 worker generally needs a $100/hour freelance rate to match net take-home, given the costs above. This is approximate but a good starting point.

If the resulting rate feels too high for your market, you have three levers: lower your income target (typically a bad idea), raise your billable hours (only sustainable up to ~30/week for most), or cut expenses. Many new freelancers shy away from quoting their true rate; this leads to chronic under-earning and burnout. Trust the math and quote the rate.

Finally: get paid quarterly. Move 25–30% of each invoice into a separate "tax savings" account the moment payment hits. Pay quarterly estimated taxes (April 15, June 15, September 15, and January 15) to avoid IRS underpayment penalties and the surprise of owing a huge balance at filing.