Freelance Rate Calculator
Know Exactly What to Charge
How Freelance Rate Calculation Works
Setting your freelance rate is more than just picking a number. You need to account for the income you want to earn, your business expenses, the fact that you won't be billable 100% of the time, and a profit margin to grow your business and cover unexpected costs.
Many new freelancers make the mistake of charging what they made as an employee. But as a freelancer, you're covering your own health insurance, retirement savings, equipment, software, taxes, and unpaid time off. Your hourly rate needs to be significantly higher than your employed hourly equivalent.
The Formula
- Annual Overhead = Monthly overhead × 12 (software, insurance, workspace, equipment)
- Profit Margin = Buffer for growth, taxes, and unexpected costs (20% recommended)
- Working Weeks = 52 minus weeks off (vacation, sick days, holidays)
- Billable Hours = Hours actually billed to clients (not total hours worked)
Tips for Pricing Your Freelance Work
- Charge based on value, not time — If your work saves a client $50,000/year, charging $5,000 for the project is a bargain regardless of hours spent.
- Raise rates for new clients — Test higher rates with each new client. You'll be surprised how often people say yes. If nobody ever pushes back, you're probably too cheap.
- Build in scope creep protection — Define clear deliverables and charge for revisions beyond the agreed scope. "Can you just..." is the most expensive phrase in freelancing.
- Offer project-based pricing — Clients prefer knowing the total cost upfront. Quote a project fee based on your hourly rate times estimated hours, plus a 20% buffer.
- Don't compete on price — Competing on price is a race to the bottom. Compete on quality, reliability, communication, and expertise instead.
Frequently Asked Questions
How do I calculate my freelance hourly rate?
Start with your desired annual income, add business expenses (software, insurance, equipment, taxes), apply a profit margin, then divide by your total billable hours. Remember: freelancers typically only bill 60-70% of their working hours — the rest goes to admin, marketing, and business development.
What is a good freelance hourly rate?
It varies enormously by field. Web developers typically charge $75-$200/hour, graphic designers $50-$150/hour, writers $40-$100/hour, and consultants $100-$300/hour. The right rate is one that covers your costs, provides a profit, and aligns with the value you deliver to clients.
How much should I set aside for taxes as a freelancer?
In the US, set aside 25-30% of your income for taxes. This covers self-employment tax (15.3% for Social Security and Medicare) plus federal and state income taxes. Open a separate savings account and transfer the tax portion every time you get paid.
How many hours per week should I work as a freelancer?
Most freelancers work 30-40 hours per week total, but only 20-30 of those are billable client hours. The rest goes to proposals, invoicing, marketing, meetings, and professional development. Build your rate around billable hours, not total hours worked.