How do I calculate my freelance hourly rate?

Work out the income you need before tax, add your yearly business costs and a buffer, then divide by the hours you can actually bill in a year. $63,000 take-home at 25% tax is $84,000; with $6,000 of costs and a 10% buffer you need $99,000, and over 1,056 billable hours that is $93.75 an hour.

How do I calculate a consulting rate?

The same way, then convert it to the unit you quote in. Multiply the hourly rate by the hours in a billed day for a day rate, by the days in a week for a weekly rate, or divide the yearly amount by 12 for a full-time monthly retainer. For a fixed-fee project, estimate the hours, multiply by the rate and add a contingency.

How many hours can a freelancer bill?

Fewer than they work. Admin, invoicing, sales, travel and learning are unpaid, and there are gaps between projects. 220 working days of 8 hours is 1,760 hours; at 60% billable that is 1,056. Track your own time for a few weeks and use your real share rather than a rule of thumb.

Should I charge hourly, by the day or by the project?

Hourly suits open-ended work where the scope changes. A day rate suits workshops, on-site work and consulting days. A project fee suits work with a clear scope, and rewards you for working efficiently. Whichever you quote, work out your minimum hourly rate first so you know the floor.

How do I compare a freelance rate with a salary?

Use the salary mode: enter the salary and your estimate of the benefits an employer paid on top, then the calculator finds the rate that replaces both after costs, time off and non-billable hours. To convert an employee's hourly wage to a yearly salary, use the hourly to salary calculator instead.

Freelance Rate Calculator

Work out the minimum hourly and day rate you need as a freelancer or consultant. Enter the income you want, your business costs, your tax estimate, your time off and the share of hours you can bill; the calculator shows the rate, the working step by step, a project quote and what you keep at any rate.

The figures filled in are an example. Replace them with your own.

1. Your income goal

Take-home income you want a year ($, after tax)

What you want to keep after business costs and tax.

Tax and contributions (% of profit)

Your own estimate of income tax and self-employment contributions on profit. Estimate US self-employment tax.

Profit or buffer (%)

On top, for slow months, late payers and growth.

2. Business costs

Everything the business pays for that a client never sees on an invoice.

Cost
Amount ($)
Per
Cost
Amount ($)
Per
Cost
Amount ($)
Per
Cost
Amount ($)
Per

Business costs: $6,000 a year

3. Time and billable hours

Working days a week

Vacation days a year

Public holidays a year (on working days)

Sick days to plan for

Hours a working day

All of it: client work, admin, sales, learning.

Billable share of hours (%)

The share of working hours you can charge a client for. 60% is an example: set your own.

Hours in a billed day

For the day rate.

Your minimum rates

Hourly rate

$93.75

Day rate (8 hours)

$750

Billed week (5 days)

$3,750

Monthly retainer equivalent

$8,250

You need to bill $99,000 a year over 1,056 billable hours.

The working, step by step

Income: take-home $63,000 ÷ (1 − 25% tax) = $84,000 before tax.
Add business costs: $84,000 + $6,000 = $90,000.
Add the 10% buffer ($9,000): $99,000 to bill a year.
Working days: 52 weeks × 5 days = 260, minus 40 days off = 220 days.
Billable hours: 220 days × 8 hours = 1,760 hours × 60% billable = 1,056 hours.
Hourly rate: $99,000 ÷ 1,056 hours = $93.75.
Day rate: $93.75 × 8 hours = $750; a billed week of 5 days = $3,750; a month = $99,000 ÷ 12 = $8,250.

Quote a project

Estimate the hours, add a contingency for the unknowns.

Estimated hours

Hourly rate to quote ($)

Empty uses your minimum rate.

Contingency (%)

Hours × rate$3,750

Contingency$562.50

Project quote$4,312.50

What you take home at a rate

Uses your billable hours, costs and tax % from above.

Hourly rate ($)

Billed (1,056 hours)$105,600

Business costs−$6,000

Tax and contributions (25%)−$24,900

Take-home a year$74,700

Take-home a month$6,225

$11,700 above your income goal.

What you type is not sent to ParrotNotes. Results are estimates from your figures, not tax or financial advice.

How to calculate your freelance rate

Hourly rate = (income before tax + business costs) × (1 + buffer) ÷ billable hours a year.

The example in the calculator: you want to take home $63,000 a year and set aside 25% of profit for tax, so you need $63,000 ÷ 0.75 = $84,000 before tax. Add $6,000 of business costs ($90,000) and a 10% buffer: $99,000 to bill a year. Five days a week is 260 days; take off 25 vacation days, 10 public holidays and 5 sick days and 220 working days are left, or 1,760 hours at 8 a day. If 60% of those hours are billable, that is 1,056 hours, and $99,000 ÷ 1,056 = $93.75 an hour.

At 8 billed hours a day that is a $750 day rate, $3,750 for a billed week and $8,250 a month. Round up, not down: the figure is the minimum that reaches your goal.

Billable hours: the number most people get wrong

The usual mistake is dividing the income you want by 2,080 hours, a full-time employee's year. A freelancer does not bill every working hour: proposals, invoicing, bookkeeping, sales calls, travel and learning all take time no client pays for directly, and there are weeks between projects.

So the billable share is the input that moves the rate most. In the example, going from 60% to 75% billable takes the rate from $93.75 to $75. Track a few weeks of your own time to set it; the 60% in the calculator is an example, not a norm.

If you are leaving a job, use the salary mode: enter the salary and the share it would take to replace what the employer paid on top (health cover, retirement, paid leave, payroll taxes). That uplift is your own estimate, because it differs by employer and country.

Consulting rate calculator: day rates, retainers and project fees

The same sums work as a consulting rate calculator. Consultants often quote by the day rather than the hour: set the hours in a billed day (7.5 or 8 are common choices, but it is your call) and the calculator gives the day rate and a billed week.

For a retainer, the monthly figure is what a full year of billing comes to each month: $99,000 ÷ 12 = $8,250 in the example. A retainer for part of your time is that figure scaled to the days a month the client books.

For a fixed-fee project, estimate the hours, multiply by your rate and add a contingency for the unknowns. 40 hours at $93.75 is $3,750; with 15% contingency the quote is $4,312.50. Experienced consultants often price on the value to the client rather than hours; your hourly minimum is still the floor under that price.

Turning the rate into a quote

A rate is only as good as the scope it is quoted against. Write down what is included, how many rounds of changes, what counts as extra and when you get paid. The quotation generator and the statement of work template turn that into a document the client can sign off.

Then check the reverse: enter the rate you plan to charge and see what you take home over a year at your billable hours, after costs and tax. If it falls short of your goal, the rate, the hours or the costs have to change.

Freelance rate vs salary

A freelance hourly rate and an employee's hourly wage are not the same number. The employee's employer pays the costs, the paid leave and part of the payroll taxes, and pays every working hour whether it is billable or not. That is why a freelance rate has to be higher than the hourly wage for the same work.

To turn an employee's hourly wage into a yearly salary or back, use the hourly to salary calculator; to work out what you need to charge as a freelancer, use this one.

Results are estimates from the figures you enter. Tax is a single percentage you set; your real tax depends on where you live, your business structure and your deductions. This is not tax or financial advice.

Your rate holds only if the scope does.

Scope creep starts in client calls: the extra report, the second round of changes, "can you also...". Record the client meeting in ParrotNotes and get the summary and action items, so the quote matches what the client actually asked for. Free for 100 minutes of recording a month.

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