Estimate the hourly rate needed to hit your income target.
Enter the yearly income you want to take home, your yearly business costs (software, insurance, equipment, accounting — anything the business pays for), and the number of hours per year you actually expect to bill clients for. The calculator adds your income target and costs together and divides by billable hours to suggest an hourly rate.
Billable hours are not the same as working hours — admin, marketing, unpaid pitches, and time off all eat into a year without generating billable time. A common starting estimate is 50–70% of full-time hours (around 1,000–1,400 hours a year), rather than assuming all 2,000+ working hours are billable. Lowering that number in the calculator raises the suggested rate, since the same income target has to come from fewer billed hours.
A freelance rate that looks steep next to a salary listing usually isn't an apples-to-apples comparison. An employer typically pays 25–35% on top of gross salary in holiday pay, pension contributions, and other benefits, and covers paid sick leave and holidays out of hours the employee never has to bill for. A freelancer has to fund all of that themselves through the rate they charge — so a number that seems high per hour is often just making visible costs that a salary quietly hides.
Enter whatever figure matters to you — pre-tax or post-tax — as long as you're consistent. Many freelancers use a pre-tax target and set aside a separate percentage for taxes from what they bill.
Software subscriptions, insurance, equipment, a portion of rent if you work from a dedicated space, accounting fees, and any other cost the business carries regardless of how many hours you bill.
Billable hours has the biggest effect. Increasing billable hours (by streamlining admin work or raising your utilization) lowers the rate needed; cutting business costs helps too, but usually by less.
Because a salaried role includes paid holidays, sick leave, pension contributions, and other employer-funded costs that a freelance rate has to self-fund out of billed hours. A freelance rate that looks high per hour often isn't actually higher once you account for the unpaid time and benefits an employee gets for free.