Guide
How to Calculate Your Freelance Hourly Rate
Work backwards from take-home income through fees, tax and honest billable hours.
Start from what you need to keep
A freelance rate built from what competitors charge tells you nothing about whether you can live on it. Start instead with the monthly income you need after tax and fees, then work backwards.
That target should cover living costs, savings, and the business expenses an employer would otherwise pay for.
Add back fees and deductions
Platform commissions, payment processing and taxes come out of gross invoicing, not out of profit. If they total 30%, you keep 70 of every 100 invoiced, so your target must be divided by 0.7 rather than reduced by 30%.
Getting this step backwards is the most common reason freelance rates come out too low.
Count billable hours honestly
Proposals, admin, invoicing, learning and unpaid revisions all consume working time. For most freelancers, five to six billable hours in an eight-hour day is realistic. Holidays, sick days and gaps between projects reduce billable days per month as well.
Dividing your required gross income by a fantasy number of hours produces a rate that quietly funds your unpaid work out of your own pocket.
Use the number as a floor
The result is your minimum viable rate. Round it up to a clean figure and treat it as the point below which work is not worth taking. Where clients prefer fixed prices, estimate the hours and multiply — but never quote a project total that implies less than your floor.
Frequently asked questions
Why is my required rate higher than competitors charge?
Because fees and tax come out of gross, and only billable hours earn. Both effects compound. A rate copied from competitors tells you nothing about whether you can live on it.
How many billable hours should I assume?
Five to six in an eight-hour day is realistic for most freelancers. Proposals, admin and revisions are unpaid. Holidays and gaps between projects reduce billable days per month as well.
Should I quote hourly or per project?
Use this rate as your internal floor, then price projects from estimated hours. Clients often prefer a fixed number, but never quote one that implies less than your floor.
Conclusion
Start from the income you need to keep, add back fees and tax by dividing rather than subtracting, count billable hours honestly, and treat the result as a floor. Round it up and quote above it, because unpaid time is the biggest hidden cost in freelance work.