A lot of new freelancers price their hourly rate by taking a target salary and dividing it by 2,000 (the classic “40 hours × 50 weeks” full-time-employee assumption). That number is almost always too low, because freelancing has none of the built-in cushions a salaried job does: no paid time off, no employer covering half your payroll taxes, and hours spent on admin and client acquisition that never get billed. Our Freelance Hourly Rate Calculator builds those realities directly into the math.
Grossing up for taxes
Rather than just subtracting a flat tax amount from your target, the calculator divides your pre-tax income need by (1 − tax rate). This correctly finds the larger gross revenue figure that, after your estimated tax rate is taken out, actually leaves you with your target take-home pay — subtracting a flat dollar amount instead would understate what you truly need to bill.
Unpaid weeks off, subtracted up front
Freelancers don’t get vacation pay by default. Every week you take off is a week with zero billable hours, so the calculator subtracts your specified weeks off from the standard 52-week year before dividing your target into an hourly rate — fewer working weeks means each one needs to carry more weight.
Only counting truly billable hours
The “billable hours per week” input should only include time you can actually invoice a client for. Admin work, proposals, marketing, and unpaid client communication are real hours you spend running your business, but they shouldn’t be counted here — that gap between total hours worked and billable hours is exactly why freelance rates typically need to be noticeably higher than a comparable salaried hourly wage.
A worked example
Target take-home of $80,000, $5,000 in annual business expenses, a 25% estimated tax rate, 25 billable hours/week, and 4 unpaid weeks off: the calculator grosses up ($80,000 + $5,000) ÷ 0.75 = $113,333 in required gross revenue, spread across 25 hours × 48 working weeks = 1,200 billable hours, for a minimum hourly rate of $94.44.
This is a floor, not a target
The result is the rate that covers exactly your stated numbers, with zero buffer for slow months, unpaid invoices, or scope creep. Many freelancers deliberately price somewhat above this calculated minimum for exactly that reason.
Try it yourself: Freelance Hourly Rate Calculator.