Free Freelance Hourly Rate Calculator

How the number is worked out

Pricing freelance work is one calculation in two steps, and almost every mistake comes from skipping the first one.

Step one: how many hours can you actually sell? A year has 52 weeks, but you will not work all of them, and you cannot invoice every hour of the ones you do.

Step two: how much revenue do those hours have to produce? Your rate has to cover your living money, your business costs, your benefits and your tax set-aside — all four, from the same invoices.

There is a catch in step two: the tax set-aside depends on the revenue you are solving for, and the relationship is not a straight line. The 12.4% Social Security portion stops at the wage base, and a 0.9% Medicare surtax starts above $200,000. So the tool solves backward, narrowing in on the revenue whose take-home matches your target exactly. Nothing is rounded until it is printed, so the breakdown rows genuinely add up.

The utilization gap is the whole calculation

Take a normal-looking year: 40 hours a week, three weeks of vacation, two weeks of public holidays, one week held back for illness. That is 46 working weeks and 1,840 hours at your desk. At 60% utilization, 1,104 of those hours are on an invoice and 736 are not. The other 736 are real work — proposals that go nowhere, chasing invoices, bookkeeping, discovery calls — and every one has to be paid for by the 1,104 a client sees.

That is why the tool prints both numbers instead of hiding utilization inside a coefficient. Price at 80% and live at 55% and you are not slightly under-charging — you are about 30% short on revenue for the whole year. Track two weeks of real hours before you trust any figure here.

Where most freelance rate calculators go wrong

• Dividing a salary by 2,080. That figure is what an employer pays an employee for, vacation and sick days included. It is not a count of hours you can sell.
• Marking up instead of grossing up. If you want $1,000 left after a 15.3% tax, you do not add 15.3% to get $1,153 — you divide, and get $1,180.64. Adding a tax percentage on top of your target under-collects every time.
• Charging self-employment tax on the wrong base. The 15.3% applies to 92.35% of net profit, not to gross revenue and not to all of profit. Both errors over-state the reserve.
• Ignoring the Social Security cap. The 12.4% portion stops once net earnings pass the wage base — $184,500 for 2026. Above it you pay 2.9%, not 15.3%. Flat-rate calculators badly over-charge high earners.
• Health insurance in the wrong box, or missing entirely. For a sole proprietor it is an adjustment to income on Schedule 1, not a Schedule C expense, so it does not reduce self-employment tax — and it is the cost left out completely most often. Hence the required field here.

A worked example

Suppose you want $70,000 in your pocket. You plan 40-hour weeks, three weeks of vacation, two of holidays and one sick week, and you have measured utilization at 60%. Your health plan costs $7,200, you want $6,000 into a solo 401(k), and software, accounting and hardware come to $4,800.

You have 46 working weeks, 1,840 hours at work and 1,104 billable hours. Working backward, you need $101,690 of revenue. Take off $4,800 of expenses and net profit is $96,890; 92.35% of that is $89,478 of net earnings, which is under the wage base, so self-employment tax is 12.4% + 2.9% of it — $13,690. Subtract the tax, the $7,200 of premiums and the $6,000 of retirement, and exactly $70,000 is left.

$101,690 ÷ 1,104 = $92.11 an hour, or $736.88 for a full billed day. The instinctive answer — $70,000 ÷ 2,080 = $33.65 — is off by nearly a factor of three. Framed as a job, that rate is worth about a $75,799 salary with employer-paid health cover and retirement — the salary that leaves you the same $70,000 once the employee half of FICA comes out, which is not the same as what an employer would spend to hire you. Our contract vs permanent calculator runs the comparison the other way round; salary to hourly handles the simpler employee conversion.

What this tool does not model

The QBI / Section 199A 20% pass-through deduction is left out on purpose: that makes the set-aside too high rather than too low, the safe direction. State and local income tax, quarterly payment timing, S-corp elections, sales tax and every non-US system are out of scope. The income tax set-aside is a rate you supply, applied to net profit after half your self-employment tax, your premiums and your deductible retirement contributions — it knows nothing about your standard deduction, a spouse’s income, or credits. Estimates only, not tax advice: talk to a CPA before setting aside taxes or setting your rate.

Edge cases worth thinking about

• Your first year. Utilization is usually well below 50% while you are still finding clients. Price for 50% and treat anything better as a buffer, not a raise.
• Long retainers. A steady retainer removes sales time, so utilization rises and the required rate falls. That is a defensible reason to discount — rerun the numbers at your retainer utilization instead of guessing at “10% off”.
• Part-time freelancing. Drop hours per week, not weeks worked. Ten billable hours a week over 46 weeks is 460 hours, and the same fixed costs land on a quarter of the hours.
• Covered by a spouse’s plan. Enter 0 for health insurance, but know your rate is now tied to their job. If that changes, the rate changes with it.
• Very high earners. Past the wage base the marginal payroll cost drops from 15.3% to 2.9%, then rises to 3.8% above the Additional Medicare threshold. The tool handles all three bands.
• Unpaid invoices. Nothing here models a client who does not pay. Add a bad-debt line to expenses, or shave your utilization.