Hourly Rate Calculator

Tool + methodology

What you should charge isn't about market rates—it's about your costs and target income.

The Formula

Target Annual Income + Business Expenses + Taxes + Profit Margin = Required Revenue

Required Revenue ÷ Billable Hours = Minimum Hourly Rate

Realistic Billable Hours

Not 2080 (40 hours × 52 weeks). Account for: vacation, sick time, admin work, sales time, non-billable projects. Realistic range: 1,000-1,400 billable hours per year.

Example

Target income: $120K. Expenses: $20K. Taxes: $40K. Profit margin: $20K. Total: $200K needed.

At 1,200 billable hours: $200K ÷ 1,200 = $167/hour minimum.

Most freelancers undercharge because they overestimate billable hours and underestimate expenses.