How do I calculate my freelance hourly rate?

Gross up your take-home income for tax, add annual business expenses, then divide that gross revenue by the billable hours you expect to sell in a year.

What is a realistic billable capacity for a freelancer?

Most solo freelancers bill between 50% and 65% of their working hours. The remaining time goes to proposals, invoicing, marketing, client communication, and admin.

Why is my hourly rate so much higher than an employee salary?

Freelancers cover their own business expenses, unpaid holidays, sick days, health insurance, and self-employment taxes. You also sell fewer billable hours per year because admin and sales work are unpaid.

How do I turn an hourly rate into a daily rate or project fee?

Multiply your hourly rate by the billable hours you work in a typical day, or estimate the total billable hours a project requires and multiply by that rate. A day rate is not an 8-hour employee day unless you actually bill eight hours.

Does this calculator upload my numbers?

No. The calculation runs entirely in your browser. No financial numbers or inputs leave your device.

Freelance rate calculator

How to calculate your freelance rate

An employee salary covers 40 paid hours every week, plus benefits and paid time off. A freelance rate works in reverse: you decide what take-home money you need, add overhead and taxes, and divide that total by the hours clients will actually buy.

The formula follows three basic steps:

Gross revenue needed = (Target income ÷ (1 − Tax rate)) + Annual expenses
Annual billable hours = (52 − Weeks off) × Weekly hours × Billable capacity %
Target hourly rate = Gross revenue needed ÷ Annual billable hours

A worked example

$90,000 take-home, $12,000 expenses, and a 25% tax rate need $132,000 of gross revenue. Tax applies to profit, so expenses are added after that gross-up.

With 4 weeks off, 35 hours per week, and 60% billable time, that is 1,008 billable hours a year and 21 billable hours a week. The target hourly rate is about $131.

Daily and project rates

A day rate is the hourly rate times the billable hours in a working day. At 21 billable hours a week across 5 days, that is 4.2 billable hours a day, not an 8-hour employee day. Multiply the hourly rate by that figure.

For a project fee, estimate the billable hours the work will take and multiply by the hourly rate.

The cost of running a freelance business

Freelancers must pay for items an employer usually handles:

Expense category	Common costs
Business overhead	Software subscriptions, hardware, web hosting, accounting, and legal fees.
Self-employment taxes	Additional tax contributions that employers usually pay half of.
Unpaid time off	Holidays, vacation, and sick leave where no income is earned.
Non-billable labor	Time spent writing proposals, tracking invoices, and marketing your services.

If you only charge what a regular job pays per hour, you will earn less money once expenses and unpaid hours take their share.

Why 100% billable time is unrealistic

A common mistake is assuming a 40-hour workweek yields 40 billable hours.

In practice, solo contractors spend a large share of time running their business:

Writing project proposals and scopes
Bookkeeping and sending invoices
Finding new clients and answering initial leads
Internal tool maintenance and learning

Most solo professionals maintain a billable capacity between 50% and 65%. On a 35-hour week, that equals 18 to 22 billable hours. Billable vs non-billable hours covers which tasks belong on an invoice and which belong in your overhead.

Track actual billable hours

A target rate gives you a benchmark for client proposals. To reach your income goal, you must know whether your real work matches that plan.

TimeRetain lets you track billable time and administrative work on your own device with manual timers and simple tags. You can check your actual billable capacity over time without uploading private records to third-party servers.

Track billable and non-billable hours on your device.

Start tracking →

If you already have timesheet records from past client work, use the billable hours calculator to total your past invoices.