About

Setting an hourly rate is the most difficult task for freelancers and new agencies. Picking a random number often leads to burnout or financial shortfalls. A professional rate must account for the substantial time spent on non-billable tasks like marketing, accounting, and client acquisition. It must also cover overhead expenses that an employer would typically absorb.

This calculator works backward from your financial goals. It determines exactly what you must charge to achieve a target annual income after expenses and time off are deducted. It highlights the discrepancy between "working hours" and "billable hours" to provide a realistic fee structure. This ensures sustainability by factoring in holidays, sick leave, and administrative overhead.

Formulas

The core logic separates total capacity from billable capacity. The hourly rate is derived by dividing total financial requirements by the actual hours available for client work.

Hours_billable = (Weeks × Hours_week) × %_efficiency

Total required revenue is the sum of target personal income and business costs.

Rate_hour = Income_target + Costs_overheadHours_billable

To calculate days off, the standard year is reduced by weekends, holidays, and planned leave.

Weeks = 365 − Days_off7

Reference Data

Experience Level	Avg. Billable Ratio	Admin Overhead (Weekly)	Suggested Markup
Junior Freelancer	75% - 85%	5-6 hours	20%
Mid-Level Consultant	60% - 70%	10-12 hours	30%
Senior Specialist	50% - 60%	15+ hours	40%
Agency Owner	20% - 30%	25+ hours	100%
Legal/Medical	55%	15 hours	150%
Creative/Design	65%	12 hours	25%
Development/Code	70%	10 hours	30%
Virtual Assistant	85%	4 hours	15%

Frequently Asked Questions

This is the percentage of your work week actually spent on paid client work. The remaining time is spent on emails, invoicing, marketing, and learning. Most successful freelancers average 60-70% efficiency. Assuming 100% efficiency guarantees underpricing.

Use this calculator to find your internal base rate. When quoting a project, estimate the hours required and multiply by this rate to get a fixed price. Fixed pricing rewards efficiency, while hourly pricing reduces risk on undefined scopes.

The "Target Annual Income" field should be your desired Net (take-home) pay plus estimated taxes. Alternatively, treat the target as Gross Income and calculate taxes separately from the result.

A standard employee works roughly 2,080 hours (40 hours x 52 weeks). However, a realistic freelancer typically bills between 1,200 and 1,500 hours per year after accounting for business development and time off.