FINBIZTOOLS
Hourly Rate Calculator
Work out the hourly rate you need to charge to reach a target annual income. Enter your desired income, billable hours per week and working weeks, plus any annual business expenses you want the rate to cover.
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Changes the currency symbol and number format only. Amounts are not converted.
How to use the Hourly Rate Calculator
- Enter your desired annual income.
- Enter the billable hours you expect to work each week and the working weeks per year.
- Open Advanced assumptions to add annual business expenses, if any.
- Select Calculate to see the required hourly rate.
Use the currency selector above the inputs to change the symbol. It changes the display only and does not convert amounts.
How the required hourly rate works
A freelancer only earns money for billable hours, not every hour worked, so the rate has to spread income and expenses over billable hours only.
Time spent on admin, sales and unpaid work is why billable hours per week is usually much lower than total working hours.
How the calculation works
Hourly Rate Calculator for Freelancers formula
Billable hours per year = Billable hours per week × Working weeks per year
Hourly rate = (Desired annual income + Annual business expenses) ÷ Billable hours per year
- Desired annual income is what you want to take home before any tax you handle separately.
- Annual business expenses are costs the rate should recover, such as software or equipment.
The rate is rounded to the nearest cent for display. Tax depends on your own situation, so add an allowance into desired income or expenses if you want the rate to cover it.
Hourly Rate Calculator for Freelancers example
Desired income of 1,200,000, 25 billable hours a week, 48 weeks and 100,000 of expenses:
| Desired annual income | 1200000 |
|---|---|
| Billable hours per week | 25 |
| Working weeks per year | 48 |
| Annual business expenses | 100000 |
| Total billable hours per year | 1200 |
|---|---|
| Required hourly rate | 1083.33 |
Amounts are shown without a currency symbol because the arithmetic is identical in any currency; the currency selector only changes the symbol and number format. The 1,200 billable hours per year come from 25 × 48.
Assumptions and limitations
Assumptions
- Billable hours and weeks are realistic averages for the whole year, including holidays and unpaid gaps.
- Expenses are a single annual total you supply; the calculator does not itemize them.
Limitations and why results can differ
- It does not model tax, benefits or seasonal changes in workload.
- A single average rate can differ from what individual clients will accept for a given project.
Frequently asked questions
How many billable hours should I assume?
Use a realistic figure based on your past work. Billable hours are almost always fewer than total hours because admin and sales time are unpaid.
Should expenses be included in the hourly rate?
Including them means the rate recovers business costs as well as your income. Leave expenses at zero to price for income only.
Does the rate include tax?
No. Tax depends on your jurisdiction and circumstances, so add an allowance to desired income if you want the rate to cover it.
Can I turn the rate into a project price?
Yes. Use the Freelance Project Quote Calculator, which multiplies estimated hours by a rate and can add a profit margin.
Methodology
Inputs are validated as finite numbers within the ranges shown on the calculator, and division by zero is rejected. The result is computed directly from the formula on this page with no intermediate rounding beyond the stated display rounding.
The calculation runs in your browser and inputs are not sent to a server.
Last reviewed:
Disclaimer
Results are calculated estimates based on the figures you enter. They are not accounting, pricing, tax or legal advice. Verify important business and pricing decisions with your own records and a qualified professional. Read the full Disclaimer.
Explore this topic
This tool is part of Freelancing and E-commerce.
Freelancers often start with an hourly or day rate before quoting a project; shops often start with order value and profit per order.
- Hourly Rate Calculator (this page)
- Freelance Project Quote Calculator
- E-commerce Profit Calculator