Work out the hourly rate you need to charge to hit your income goal after expenses and taxes.
$72.22
Monthly billing target
$7,222.22
Billable hours/year
1,200
Many freelancers make a critical mistake: dividing a salary goal by 2,080 hours and calling it done. In reality, the rate you charge clients must cover far more than take-home pay. Non-billable time — meetings, emails, proposals, admin — consumes roughly half your week. Add self-employment taxes (15% or more), business expenses, and overhead, and that salary suddenly needs a 40–60% markup to account for what actually happens outside billable hours. This tool calculates the hourly rate you need to charge to hit your income goal while accounting for the gap between hours you work and hours you can bill.
You want $50,000 take-home, work 25 billable hours per week for 50 weeks, and have no taxes or expenses. You need to charge $40/hour. Simple math: $50,000 ÷ 1,250 hours.
Now add a 25% tax rate and $5,000 annual expenses. The gross revenue needed jumps to $86,667 (accounting for taxes). Spread over 1,440 billable hours, your rate must rise to roughly $60/hour — a 50% increase from the first scenario.
How do I set my freelance rate?
Start with your desired take-home income (what you actually want to earn), add up all direct business costs, estimate your tax burden, and account for non-billable time by reducing the number of billable hours you expect to complete each week. This tool handles the math once you've estimated those inputs.
Why isn't billable time the same as working time?
Billable hours are time spent directly working on client deliverables. Non-billable time includes proposals, contract negotiation, invoicing, professional development, marketing your services, and admin. Most freelancers find their actual billable time is 40–60% of total hours at their desk.
Should I factor taxes into my rate?
Absolutely. As a freelancer, you're responsible for income tax and self-employment tax. If you don't factor this in, you'll end up with less money than your goal after paying the tax bill. Use your expected marginal tax rate (income tax + 15% self-employment tax gives you a rough total).