Enter your income goals and expenses. Get the exact hourly rate you need to actually make it work.
Enter the take-home pay you need each month, your business expenses, a tax buffer percentage, and how many hours a week you can actually bill. Then set your vacation weeks and your non-billable overhead. The page returns the hourly rate that covers all of it and a recommended rate with a margin on top.
Two fields are where freelancers fool themselves. The hours field means billable hours, not hours at the desk, and the overhead slider accounts for the admin, marketing and quoting that nobody pays for.
$5,000 a month of take-home, $800 of expenses, a 25% tax buffer, 25 billable hours a week, 4 weeks off, and 30% non-billable time:
| Step | Value |
|---|---|
| Gross needed each month | $7,733 |
| Billable hours each month | 70 |
| Minimum rate | $111 an hour |
| Recommended rate | $139 an hour |
The billable hours are the number that shocks people. Twenty-five hours a week sounds like plenty until you remove four weeks of holiday and 30% of overhead: 48 working weeks at 25 hours is 1,200 hours a year, and only 840 of them are billable. Divide $92,800 of gross by 840 and the rate is $110.48.
The minimum rate is break-even, not a target. It is what you must charge to hit the take-home you asked for while paying your expenses and your taxes, and it assumes every billable hour is sold. Charge the minimum and a single slow month puts you behind, which is why the recommendation adds 25% — a buffer for the gap between hours available and hours sold.
The tax buffer deserves its own line because self-employment tax catches people out. Setting aside a quarter of gross is a common rule of thumb for a sole proprietor, and the freelance tax estimator will give you a better figure from your actual numbers. What matters here is that the rate is calculated on gross income, so the tax has to come out of it.
The overhead slider is doing more work than it looks. At 30%, every ten billable hours costs you three hours of unbilled time on quotes, invoices and email. Raise it if you spend more time selling than delivering, which is normal in the first year. A rate built on an optimistic overhead number is a rate that quietly pays you less.
Because the minimum assumes you sell every available hour. The extra 25% is margin for the months when you do not.
Software, insurance, equipment, your share of home costs, and anything else you would not pay if you were employed. Not your personal groceries.
Use the hourly number to price the project. Quoting a fixed fee prevents penalising clients for your efficiency, and the rate tells you whether the fee is viable.
In writing, with a date, and with a reason that is not an apology. Give existing clients a longer notice period than new ones get.
Then raise the rate or lower the take-home target. Working more unpaid hours does not fix the arithmetic.
The rate itself is this page’s arithmetic. The tax piece should be checked against the IRS, not against the buffer percent.
Last updated: November 2, 2026. Reviewed by David Liu.