Freelance Hourly Rate Calculator: what should you charge?

Why freelance rates are higher than salaries

A common mistake is to take an employee's hourly pay and charge the same. As a freelancer you pay for things an employer would cover, and you are not paid for every hour you work:

• No paid holidays or sick days. Most freelancers take 5 to 8 weeks a year off for holidays, public holidays and illness.
• Unbilled time. Finding clients, writing quotes, invoicing, chasing payments and learning take up a lot of hours. Many freelancers bill 60 to 70% of the time they work.
• Business costs. Equipment, software, insurance, an accountant, a workspace and your own pension.
• Tax and social charges that an employer would normally take care of.

The formula

Hourly rate = (take-home pay ÷ (1 − tax rate) + business costs) × (1 + safety margin) ÷ billable hours a year

Billable hours a year = (52 − weeks off) × hours a week × share of hours you can bill

For example, to take home 60,000 with 6,000 of costs, a 25% tax rate and a 10% margin, you need to bill 94,600 a year. Working 40 hours a week for 46 weeks and billing 65% of the time gives 1,196 billable hours, so the minimum rate is about 79 an hour.

Hourly, daily or by the project?

The rate here is the least you should charge to reach your target. Many freelancers quote a day rate or a fixed project price instead. To price a project, estimate the hours, multiply by your rate and add a buffer for changes, then send it with the quote generator. Also check what others in your field and area charge, because the market rate may be higher than your minimum.

This calculator gives an estimate, not tax or financial advice. Tax rates depend on where you live and how your business is set up, so ask an accountant for your own figures.