A rate that covers the whole business
Your rate needs to fund more than the hours you spend delivering client work. It also supports business expenses, unpaid administration, time off, and money reserved for tax or savings.
1. Find the required annual revenue
We add your desired take-home income and annual business expenses, then adjust for the percentage you want to reserve. For example, a 25% reserve means the take-home and expense total represents 75% of required revenue.
2. Estimate annual billable hours
We subtract unpaid or vacation weeks from 52, then multiply the remaining weeks by your realistic billable hours per week.
3. Treat the result as a starting point
The calculated number is a sustainability floor based on your inputs. Compare it with your experience, positioning, demand, and the value of the work before quoting clients.
Example
A freelancer wants 60,000 in take-home income, has 12,000 in annual expenses, reserves 25%, takes five weeks off, and bills 25 hours per week.
- Required revenue: 96,000
- Annual billable hours: 1,175
- Calculated hourly rate: 81.70
The amount appears in whichever currency the freelancer selected.
Common questions
What is a good hourly rate for a freelancer?
A sustainable rate covers your desired personal income, business expenses, unpaid time, and tax or savings allowance. The right number depends on your costs, experience, market, and billable capacity.
Why are billable hours lower than working hours?
Freelancers also spend time on proposals, email, administration, marketing, learning, and bookkeeping. Those hours support the business but usually cannot be charged directly to a client.
Should I include tax in my hourly rate?
It is sensible to reserve part of revenue for taxes or other obligations. The correct percentage depends on where you live and your circumstances, so verify it with current local guidance or a professional.
Can I use this rate for fixed-price projects?
Yes. Multiply the rate by your estimated project hours, then add scope risk, direct costs, and any profit margin.