Hourly Rate Calculator
Figure out what to charge per hour as a freelancer or consultant
Your Target & Availability
Tell us your income goal and how much you can realistically bill
What you want to take home each year
Realistic client-facing hours (not admin time)
Estimated tax rate on your income
Software, insurance, equipment, etc.
Enter your target income to see suggested rate
How This Calculator Works
This calculator reverse-engineers your hourly rate from your income goal, working backward through all the costs and limitations you face as a freelancer.
The Logic
1. **Start with Your Goal:** How much do you want to take home annually (after tax)?
2. **Add Business Overhead:** Software, insurance, equipment, coworking space—expenses that aren't client-facing but are essential to your business.
3. **Add Tax Buffer:** Freelancers pay income tax + National Insurance (UK) or self-employment tax (US). The calculator adds a buffer to ensure you have enough to cover taxes.
4. **Calculate Billable Hours:** You work 40 hours/week, but how many are actually billable to clients? The rest is proposals, admin, marketing, learning—important but unpaid. This calculator uses YOUR realistic billable hours, not a fantasy number.
5. **Subtract Holiday Weeks:** You deserve time off. Employees get paid holiday. Freelancers don't, so we calculate working weeks (52 - holiday weeks).
6. **Divide:** Total target revenue ÷ Total billable hours = Your hourly rate.
Example
£60,000 income + £9,600 overhead = £69,600 pre-tax target. With 30% tax, you need £90,480 in revenue. If you can bill 20 hours/week for 48 weeks (4 weeks off) = 960 billable hours. £90,480 ÷ 960 = £94.25/hour.
This is why freelance rates are 2-3× employee hourly equivalents—you're covering costs employees don't think about.
When to Use This Calculator
Setting Your Initial Rate
If you're new to freelancing and have no idea what to charge, this calculator grounds your rate in reality: your financial needs, not what feels "fair" or "competitive."
Reality Check for Existing Rates
Already freelancing? Input your current rate in reverse—will it actually hit your income goal? Many freelancers realize they're undercharging by 30-40%.
Evaluating Job Offers
Thinking of leaving employment for freelancing? Input your current salary as the desired income. The calculated hourly rate is what you need to charge to maintain that lifestyle—it's usually shocking.
Negotiating Rate Increases
Show clients the math. "My overhead increased by £200/month, so I need to adjust my rate by £X/hour to maintain the same take-home pay."
Part-Time Freelancing
If you freelance evenings/weekends, input realistic billable hours (e.g., 10 hours/week). The calculator shows why part-time freelancers need higher hourly rates.
Different Service Tiers
Calculate separate rates for strategy work vs execution work. If strategy requires 15 billable hours/week, but execution can be 30 hours/week, strategy needs a higher rate.
Location Arbitrage Planning
Moving somewhere cheaper? Reduce your desired income and overhead to see how much you can lower your rate (or keep rate the same and earn more).
Common Mistakes to Avoid
Overestimating Billable Hours
The biggest error. Most freelancers bill 50-60% of their working hours, not 100%. If you work 40 hours/week, 20 billable hours is realistic. Inputting 40 hours makes your calculated rate artificially low, and you'll never hit your income goal.
Forgetting Tax
In the UK, basic rate is 20% income tax + 9% National Insurance = 29%. Higher rate is 40% + 2% = 42%. In the US, self-employment tax is 15.3% + income tax (12-37%) = 27-52%. Input a realistic tax buffer, or you'll have a nasty surprise at tax time.
Underestimating Overhead
It's not just software. Include: Professional insurance (£300-1,000/year), equipment replacement (laptop every 3 years = £40/month), coworking space or home office costs, accountant fees, marketing, courses, travel, sick days, slow months. £500/month minimum. £1,000/month is more realistic.
Ignoring Unpaid Time
You spend 5 hours writing a proposal. You don't win the project. That's 5 hours of work you don't get paid for. This is why your billable hours are lower than total hours—you're covering unpaid time in your billable rate.
Using Gross Salary for Comparison
Employees think "I earn £50k" but that's gross. After tax, it's £38k. Plus employer pays National Insurance you never see (13.8% = £6,900). True cost to employer: £56,900. To match £50k gross as a freelancer, you need £56,900 revenue, not £50,000.
Not Adjusting for Reality
You won't work 48 weeks your first year. You'll spend 8-12 weeks finding clients. You won't bill 20 hours/week immediately—maybe 10 at first. Input conservative numbers in year 1, then adjust annually as you stabilize.