How to Calculate Freelance Hourly Rate?
One of the biggest mistakes new freelancers make is setting their hourly rate based on a traditional full-time salary. As a freelancer, you are a business. You must account for costs that an employer would typically cover.
This freelance hourly rate calculator based on expenses uses a reverse-engineering formula. First, it takes your desired net take-home pay. Then, it adds your business expenses (software, hosting, equipment) and adjusts for income tax and insurance.
Finally, it divides that gross required revenue by your actual billable hours, factoring in vacations and unbilled administrative time.
The "Billable Hours" Trap
Do not calculate your rate assuming you will work 40 billable hours a week. Studies show that independent professionals typically only spend about 50% to 60% of their time on billable client work.
The rest of your week is spent on unpaid administrative tasks: marketing, answering emails, writing proposals, invoicing, and skills training. If you set your rate based on 40 hours, you will inevitably underprice yourself and burn out. We recommend setting your billable hours between 20 to 25 hours per week in the calculator.