How to calculate your freelance hourly rate

Start from what you need to take home

Write down what you need to earn in a year after tax to cover your life and save a little. This is your floor, not your goal.

Add what the business costs to run

Software, equipment, insurance, a phone, an accountant, professional fees, training, a share of your home office. Add them up for a year. If you are not sure, look at the last twelve months of your bank statements.

Add what you need to set aside for tax

Employees have tax taken off their pay. You have to put it aside yourself. How much depends on your country and income, so check the rules where you live or ask an accountant, and use a percentage you can stick to.

Count your billable hours honestly

You will not bill 40 hours a week. Admin, sales, emails, invoicing and learning all take time nobody pays for. Many freelancers find 20 to 30 billable hours a week realistic. Then take off holidays, public holidays and a few sick days.

The formula, and a worked example

Minimum hourly rate = (take-home + business costs + tax set-aside) / billable hours in a year.

Example only: say you want to take home 50,000 a year, your business costs 6,000 and you set aside 15,000 for tax. That is 71,000. At 25 billable hours a week for 44 working weeks, you have 1,100 billable hours. 71,000 / 1,100 is about 65 an hour. That is the least you can charge, in your own currency.

Minimum, target and project prices

Your minimum keeps you afloat. Your target rate adds a margin for quiet months and growth. For day rates, multiply by the billable hours you would really do in a day. For projects, estimate the hours for each task, multiply by your target rate, and add a buffer for the unknowns.

The common mistakes

• ✓Copying a competitor's rate without knowing their costs, hours or clients.
• ✓Counting 40 billable hours a week, then working evenings to cover the admin.
• ✓Forgetting the things an employer used to pay for: holidays, sick days, a pension, equipment.
• ✓Never raising the rate, so inflation quietly cuts your pay each year.
• ✓Quoting a project from a gut feeling instead of from hours and a buffer.

Review it every year

Costs rise and you get better. Recalculate once a year, and give existing clients clear notice before you change their rate.

From the Stelaah Store

• ✓Freelancer Rate Calculator. A free online freelancer rate calculator that works out your minimum hourly and day rate from your take-home goal, costs, tax and billable hours.
• ✓Freelance Rate Calculator Pro. An Excel and Google Sheets freelance rate calculator with hourly, day and week rates, project pricing, three scenarios, a retainer builder and break-even hours.
• ✓Freelance Project Pricing and Profitability Workbook. An Excel and Google Sheets workbook that works out your hourly rate and prices each project from its tasks, costs and contingency, then shows your real hourly rate as you log time.
• ✓2027 Rate Increase Letter Kit. Three free rate increase letters for 2027, for retainer, project and long-standing clients, as a PDF and a Word file.