Hourly Rate Calculator
Figure out what you should charge per hour as a freelancer or consultant.
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).
Frequently Asked Questions
Why is my calculated rate so high?
Because it's realistic. Employees don't see the full cost of employment: pension, National Insurance, holiday pay, sick pay, equipment, office space. Freelancers cover all of that. A £50k employee costs their employer £65-70k. Your freelance rate needs to cover all of that, plus the risk of irregular work.
Should I charge different rates for different clients?
Yes. This calculator gives you your MINIMUM viable rate. For high-value clients, enterprise companies, or rush jobs, charge 1.5-2× your minimum. For charities or long-term retainers (steady income, lower risk), you might go slightly below. But never go below your calculated minimum.
What if I can't find clients at this rate?
You have three options: (1) Reduce your desired income—can you live on less?, (2) Reduce overhead—cheaper tools, work from home, (3) Increase billable hours—better systems, fewer non-billable tasks. If none work, freelancing in that field at your location isn't viable. Consider employment, different services, or relocating.
How do I handle day rates vs hourly rates?
Day rate = Hourly rate × Hours per day × 0.85. The 0.85 factor (15% discount) is because buying a full day is less risky for you than piecing together hours. If your hourly is £100, day rate is £100 × 8 × 0.85 = £680.
What about project-based pricing?
Use your hourly rate as the foundation. Estimate hours the project will take, add 25% buffer for scope creep/revisions, multiply by your hourly rate. Then ask: What value does this deliver to the client? If your £10k project helps them make £100k, you can charge £15-20k (value-based pricing).
Should I adjust my rate annually?
Yes. Review every January: (1) Did your overhead increase? (2) Are you more experienced (worth more)? (3) Did inflation eat into your income? Most successful freelancers raise rates 5-10% annually. Existing clients might stay at old rates (grandfathered), but all new clients get the new rate.