How to calculate your freelance hourly rate

Many freelancers take their old salary and divide it by 40 hours a week. That rate is too low, because a freelancer bills far fewer hours than they work and pays costs an employer used to cover.

Updated

Why billable hours are fewer than you think

A freelancer working full time often bills around 25 hours a week. Use your own records if you have them. The rest of the time goes here:

  • Holidays, public holidays and sick days take several weeks out of the year.
  • Sales, admin, bookkeeping and learning take hours every week that no client pays for.
  • Gaps between projects happen, even with a full pipeline.

The formula

billable hours = working weeks x billable hours per week
hourly rate = (target income + business costs) / billable hours

A worked example

You want 60,000 a year before tax and have 10,000 in business costs such as software, equipment, insurance and an accountant. You plan to work 46 weeks and bill 25 hours in each.

That is 1,150 billable hours. Divide 70,000 by 1,150 and the rate comes to 60.87 an hour. A buffer of 10 percent for slow months raises it to 66.96.

Calculate your own rate

The freelance hourly rate calculator takes your target income, costs, working weeks, billable hours and an optional buffer. It shows the hourly rate, a day rate for 8 hours and the revenue you need each month.

Freelance Hourly Rate CalculatorFind the hourly and day rate that covers your target income and costs on realistic billable hours.

Before you send a quote

The rate is before VAT. If you charge VAT, add it on top for your invoice and keep it apart from your income.

VAT CalculatorAdd VAT to a net price or remove it from a gross price, with current rates for the UK and Europe.

Tools for this guide

All tools →
Freelance Hourly Rate CalculatorFind the hourly and day rate that covers your target income and costs on realistic billable hours.VAT CalculatorAdd VAT to a net price or remove it from a gross price, with current rates for the UK and Europe.Break-Even CalculatorFind how many units you need to sell to cover your fixed costs, or to reach a profit target.

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