How The Calculator Works

The Formula

Hourly Rate = ( (Desired Salary + Expenses) ÷ (1 - Tax Rate) × (1 + Profit Margin) ) ÷ Billable Hours Per Year

Step by Step

  1. Add your desired annual salary — what you want to take home after taxes.
  2. Add annual business expenses — software, hardware, insurance, marketing.
  3. Enter your tax rate — as a self-employed person, this includes income tax + self-employment tax (typically 25-35%).
  4. Set your billable hours — how many hours per week you actually get paid for (not including admin, marketing, breaks).
  5. Add unpaid weeks — vacation, sick days, holidays.
  6. Set your profit margin — extra cushion above your costs (recommended: 20-30%).

Example

A freelancer who wants $65,000/year, has $5,000 in expenses, pays 30% taxes, works 25 billable hours/week, takes 4 weeks off, and wants 20% profit would need to charge approximately $65-75/hour.

Why This Matters

Many freelancers only calculate: salary ÷ hours. That misses expenses, taxes, and profit — leading to undercharging and burnout.

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