How do you calculate your freelance hourly rate?
Freelance hourly rate = (target take-home income + business expenses + taxes) / billable hours per year. A freelancer targeting $80K take-home with $10K expenses, ~30% tax burden, and 1,200 billable hours (25 hrs/week × 48 weeks) needs to bill ~$117/hour. Most freelancers under-price because they use 40 hrs/week × 52 weeks instead of realistic billable hours.
Freelance rate build-up example
| Component | Amount | Notes |
|---|---|---|
| Target take-home | $80,000 | |
| Business expenses | $10,000 | Software, hardware, coworking |
| Tax reserve (~30%) | $38,571 | Self-employment + income |
| Total revenue needed | $128,571 | |
| Billable hours/yr | 1,200 | 25/wk × 48 wks |
| Minimum hourly rate | $107 | Below this you're subsidizing clients |
Context
The single biggest freelance pricing mistake is treating 40 hours/week as billable. Realistic billable hours are typically 50–70% of your workweek — the rest is admin, sales, invoicing, and unpaid rework. If you bill $75/hour on a 60% utilization schedule, your effective rate is $45.
Methodology
Standard freelance pricing formula. Tax reserve assumes US self-employment tax (15.3%) + ~15% federal + state — adjust for your jurisdiction.
Model your own numbers
Last updated 2026-07-10.