How to calculate your freelance hourly rate (the honest way)

The mistake: dividing salary by 2,080

A full-time employee works about 2,080 hours a year, so it is tempting to divide your old salary by that. But freelancers pay their own taxes and expenses, take unpaid holidays, and spend a big share of every week on admin, sales and learning. That's work nobody pays you for directly.

The formula

• Revenue needed = (take-home goal ÷ (1 − tax rate) + business expenses) × (1 + margin)
• Billable hours = working weeks × hours per week × billable share
• Minimum hourly rate = revenue needed ÷ billable hours

Worked example

Take-home goal $60,000, tax 30%, expenses $6,000, 15% margin: revenue needed ≈ $105,471. With 44 weeks × 40 hours × 60% billable = 1,056 hours, the minimum rate is about $99.88/hour. Most people's first guess is far lower.

Then price the value, not the hour

Your hourly rate is a floor, not a price tag. For projects, estimate hours with a risk buffer, then offer three options so the client chooses how much value they want.

FAQ