How to Set Your Freelance Hourly Rate (Free Calculator)

Most freelancers set their rate by guessing, copying a number a friend mentioned, or matching whatever a client's budget seems to be. All three tend to end in undercharging. Here's a formula that starts from what you actually need to earn.

The formula

hourly rate = (desired income + annual expenses) ÷ (1 − tax & buffer %)
              ÷ (weeks per year × hours per week × billable %)

Four numbers matter more than people expect:

• Billable percentage. Almost no one bills 100% of the hours they work — admin, proposals, and client calls eat into it. Most freelancers land between 60% and 80% billable, not 100%.
• Tax & buffer. An employee's paycheck already has taxes, health insurance, and retirement withheld. A freelancer has to build that into the rate instead, along with a cushion for slow months.
• Weeks per year. 52 minus vacation, holidays, and sick time — not 52.
• Annual expenses. Software subscriptions, insurance, equipment — these get added to your income target before dividing, not left out.

Rather than doing this math by hand, use the free rate calculator — enter your numbers and it computes an hourly, daily, and weekly rate instantly, entirely in your browser.

Turning a rate into a real number for a client

Once you have a rate, two things make it easy to act on:

1. Track hours as you go. Use the free timesheet generator to log hours by task and export a clean PDF — useful both for your own records and for clients who want to see where time went.
2. Send a quote before you start. The free estimate generator turns your rate and a scope into a professional PDF quote in a couple of minutes, so the number is agreed on before any work begins.

When to raise it

A rate that was right a year ago rarely still is. A few signals it's time to raise it:

• You're consistently booked out more than a few weeks in advance.
• New clients accept your rate without negotiation.
• You're doing more experienced-level work than when you set the rate originally.

Raise it for new clients first — existing relationships can get a heads-up and a later effective date.

Common questions

Should I charge different rates for different clients? It's common to have a standard rate and a slightly higher one for rush work or scope that changes often — just be consistent enough that it feels principled, not arbitrary.

Is this rate before or after taxes? The calculator's "tax & buffer" input already accounts for taxes, so the resulting rate is what you'd charge a client — you set aside the buffer portion yourself as you get paid.

Does this work for project-based pricing too? Yes — multiply the hourly rate by your estimated hours for the project to get a starting point for a flat-fee quote.

Ready to run your own numbers? Try the rate calculator — free, no account needed.