Most people set a freelance rate by copying a competitor or halving their old salary, then wonder why the year comes up short. This calculator runs the math the other way around: it starts from the income you actually want, adds the cost of running your business, and then accounts for the hours you can never bill — so the number it gives you is the rate that gets you to your target instead of past it.
How it works
Your hourly rate is not your income divided by every hour you work. Only the hours you can invoice a client earn money; the rest goes to proposals, admin, marketing, and the gaps between projects. So the calculator first works out how many hours a year you can genuinely bill, then divides everything you need to earn across only those hours.
It counts your working weeks as 52 minus the weeks you take off, multiplies by your hours per week to get total working hours, and applies your billable percentage to land on billable hours. It adds your annual business costs to your target income, because that money has to come out of what you invoice, and divides the total by those billable hours. The day rate is the hourly figure across an eight-hour day, and the monthly revenue target is your income plus costs spread over twelve months.
Worked example
Say you want to earn $80,000, you spend $6,000 a year on business costs, you take 6 weeks off, you work 40 hours a week, and you can bill 60% of that time.
- Working weeks: 52 − 6 = 46 weeks
- Total working hours: 46 × 40 = 1,840 hours
- Billable hours: 1,840 × 60% = 1,104 hours
- Revenue to cover: $80,000 + $6,000 = $86,000
- Hourly rate: $86,000 ÷ 1,104 = $77.90
- Day rate: $623.19 (8 × the unrounded hourly rate of $77.8985…, not the rounded $77.90 — which is why it isn't exactly $623.20)
- Monthly revenue target: $86,000 ÷ 12 = $7,166.67
Notice what the billable percentage does. Spread $86,000 across all 1,840 working hours and you get about $46.74 an hour; charge that, and the 736 hours you spend each year on unbillable work quietly come out of your own pocket. Billing for 60% of your time is what lifts the honest rate to $77.90.
How to interpret your result
Read this number as a floor, not a ceiling. It is the gross business revenue you need per billable hour to hit your target — income tax and self-employment tax still come out of it, and so do your personal living expenses. It is what the business must bring in, not what lands in your account.
The calculator tells you what you need; the market decides what it will pay. If your rate lands far above what similar freelancers charge in your area, the fix is usually in your inputs: trim business costs, or raise your billable percentage by protecting more of your week for client work. The result is also sensitive — nudging billable hours from 60% to 50% pushes the same target well past $90 an hour — so treat it as your considered default and negotiate up from there, not down.
Methodology & sources
The formula is hourly = (desired income + annual business costs) / (working weeks × hours per week × billable %), where working weeks = 52 − weeks off. The day rate is hourly × 8, and the monthly revenue target is (income + costs) / 12. Two assumptions are baked in: every working week you enter is one you could bill in, and the costs you list are business costs, not personal spending.
Keeping business costs separate from personal income is standard small-business bookkeeping; the U.S. Small Business Administration's guide to calculating startup and running costs is a practical checklist for what belongs in that figure. And because the result is gross revenue, remember that self-employment tax — a flat 15.3% on net earnings, per the IRS — is still owed on top of ordinary income tax.