Hourly Rate Calculator
Turn your income goal, expenses, and realistic billable hours into a clear hourly rate—updated live as you adjust the numbers.
Calculator
What you want to earn before personal income tax.
Software, insurance, coworking, equipment, etc.
Extra % on income + expenses for taxes, slow months, or profit.
Often 46–48 after holidays and time off.
Results
Suggested hourly rate
$92.00
Target annual revenue
$110,400.00
Annual billable hours
1200
Weekly billable revenue
$2,300.00
If you hit your billable-hours target every week
What this means
Suggested rate is on the stronger side of typical freelance bands—still validate against market and utilization.
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Hourly Rate Summary
Your hourly rate should cover desired income, business expenses, and a profit buffer, divided by the hours you can actually bill each year—not the hours you hope to work.
Explanation
Suggested hourly rate is target annual revenue divided by annual billable hours.
Target annual revenue is (desired income + expenses) increased by your profit/buffer percentage.
Annual billable hours is weekly billable hours × weeks worked per year.
Business implication: if you ignore non-billable time, your “fair” rate looks cheaper than you can sustain.
Step-by-step example
Desire $80,000 income, $12,000 expenses, 20% buffer, 25 billable hours/week, 48 weeks:
- Base need: $80,000 + $12,000 = $92,000
- Target revenue: $92,000 × 1.20 = $110,400
- Billable hours: 25 × 48 = 1,200
- Hourly rate: $110,400 ÷ 1,200 = $92.00
Formula
Target revenue = (Desired income + Expenses) × (1 + Profit% ÷ 100)
Annual billable hours = Hours/week × Weeks/year
Hourly rate = Target revenue ÷ Annual billable hours
Helpful tips
- Pair this with the Utilization Rate Calculator—low utilization means you need a higher sticker rate.
- Revisit rates yearly when expenses, tools, or lifestyle costs rise.
- Market rates still matter: use this as a floor, then price for value where you can.
FAQ
How many billable hours should I assume each week?
Many freelancers bill 20–30 hours per week even when working full time, because sales, admin, and learning are not billable. Using 40 billable hours usually underprices your rate.
Should the desired income include taxes?
This calculator treats desired income as what you want before personal income tax. Use the profit/buffer field (or a higher income target) to reserve for self-employment tax and slow months.
What profit buffer should I use?
A common starting point is 15–30% on top of income plus expenses. Raise it if revenue is lumpy, you need equipment reserves, or you want clearer profit beyond covering costs.
How accurate is this calculator?
It uses a standard capacity model: target revenue divided by annual billable hours. Your real rate also depends on market demand, positioning, and utilization. Treat the result as a baseline, not a ceiling.
Related tools
Key terms
Hourly rate
Definition. The price you charge per billable hour so income and business costs fit your goals.
In simple terms. A sustainable rate covers desired income, business expenses, and non-billable time—not only the hours you hope to invoice.
Hourly rate ≈ (desired income + annual expenses + profit buffer) ÷ annual billable hours
Example. If you need $90,000 covered and expect 1,200 billable hours, you need about $75/hour before tax nuance.
Common mistake. Pricing from take-home wish alone while ignoring expenses, taxes, and unpaid admin time.
Related calculators. Hourly Rate Calculator, Effective Hourly Rate Calculator
Related terms. Effective hourly rate, Utilization rate, Billable hours
Billable hours
Definition. Hours you can reasonably charge a client for—usually delivery work, not all work time.
In simple terms. Marketing, bookkeeping, learning, and unpaid meetings often are not billable. Capacity planning should separate available hours from billable hours.
Annual billable hours ≈ weekly billable hours × working weeks
Example. 20 billable hours/week × 48 weeks ≈ 960 billable hours/year.
Common mistake. Using 2,080 hours (40 × 52) as if they were all billable.
Related calculators. Hourly Rate Calculator, Utilization Rate Calculator
Related terms. Utilization rate, Hourly rate
Utilization rate
Definition. The share of available work time that is billable (or productive toward revenue).
In simple terms. No one bills 100% of the week. Utilization explains why a target hourly rate must be higher than a naive income ÷ hours-in-a-year math.
Utilization = billable hours ÷ available hours
Example. 25 billable hours in a 40-hour week is 62.5% utilization.
Common mistake. Assuming full-time hours are all billable when setting prices or hiring capacity.
Related calculators. Utilization Rate Calculator, Hourly Rate Calculator
Related terms. Billable hours, Hourly rate, Effective hourly rate
Effective hourly rate
Definition. What you actually earned per hour after dividing real pay by all hours worked—not only billed hours.
In simple terms. Project fees can look high until you count revisions, sales, and admin. Effective rate shows the true return on time.
Effective hourly rate = total earnings ÷ total hours worked
Example. A $3,000 project that took 60 hours (including unpaid work) is $50/hour effective—not the $100/hour you quoted for 30 billable hours.
Common mistake. Comparing quoted rates across freelancers without knowing how much unpaid time each includes.
Related calculators. Effective Hourly Rate Calculator, Project Pricing Calculator
Related terms. Hourly rate, Utilization rate, Billable hours
Notes & Assumptions
Capacity-based rate setting is a common freelance and agency planning method. Adjust inputs to match your country's tax and leave norms.
Last reviewed: July 2026