Pay and salary · rules read October 11, 2026
Hourly rate for freelancers and contractors
Start from the income you want, add what the business costs, and divide by the hours a client will really pay for.
Written by Radif Partners · How the hours are counted · Editorial policy
Hourly rate to charge
$68.70
1,150 billable hours over 46 weeks
| Revenue needed | $79,000 |
| Day rate (8 billable hours) | $550 |
| Same income as an employee at | $33.65/h over 2,080 h |
Self-employed people also pay both halves of Social Security and Medicare; put an estimate of that tax in the income figure if you want it covered. How this is calculated.
A freelance hourly rate is the target income plus the yearly business costs, divided by the hours you can actually bill in a year. Someone who wants $80,000 of income, spends $12,000 a year on software, equipment, insurance and a home office, bills 25 hours a week and takes 6 weeks off needs $80.00 an hour: $92,000 spread over 1,150 billable hours. The same $80,000 as an employee salary works out to only $38.46 an hour over 2,080 hours, which is why copying a former wage almost always leaves a contractor short. The gap has three causes. Billable time is a fraction of working time, because selling, invoicing, travel and admin are unpaid. Weeks off, holidays and sick days earn nothing. And costs an employer used to carry, from the laptop to the health plan, now come out of the rate. Raising billable hours from 25 to 30 a week lowers the required rate to $66.67; taking ten weeks off instead of six raises it to $87.62.
Your quoted rate per hour actually worked
Earned per hour worked
$46.88
| Billed each week | $1,875.00 |
| Billable share of your time | 63% |
| Unbilled hours a week | 15.0 |
Before business costs and self-employment taxes.
The formula, and where each number comes from
The calculator uses one line of arithmetic: required rate equals target income plus yearly costs, divided by billable hours per week times working weeks. Every input is a decision, not a fact, and each one deserves a real number rather than a guess.
Target income is what you want to pay yourself before personal taxes, comparable to a gross salary. Yearly costs are what the business spends to exist, listed one by one: a designer's software and font licenses, a consultant's travel, a developer's hardware every three years divided by three. Billable hours are the hours a client will see on an invoice, which for most solo professionals is well under the hours spent working. Weeks off cover vacation, federal holidays, sick days and the slow weeks between projects; the 2026 holiday list alone accounts for more than two weeks of weekdays.
| Target income | Yearly costs | Billable h/week | Weeks off | Billable hours/year | Required rate |
|---|---|---|---|---|---|
| $50,000 | $6,000 | 25 | 6 | 1,150 | $48.70 |
| $65,000 | $8,000 | 25 | 6 | 1,150 | $63.48 |
| $80,000 | $12,000 | 25 | 6 | 1,150 | $80.00 |
| $80,000 | $12,000 | 30 | 4 | 1,440 | $63.89 |
| $100,000 | $15,000 | 25 | 6 | 1,150 | $100.00 |
| $120,000 | $20,000 | 30 | 6 | 1,380 | $101.45 |
| $150,000 | $25,000 | 30 | 8 | 1,320 | $132.58 |
A contractor's rate is not an employee's wage
The two numbers measure different things. An employee's hourly wage is paid for every hour on the clock, and federal law adds protections around it. The Department of Labor state table sets minimum wages from $7.25 federally to $16.90 in California, and Fact Sheet #23 requires time and a half after 40 hours in a workweek. A paid holiday, a paid vacation week and an employer-funded health plan are all part of the package without appearing in the hourly figure.
A contractor's rate has to fund all of that internally. That is why a contract rate far above the wage for similar work is not greedy; it is the same income measured over fewer paid hours, with the overhead added back. In the main example, the required $80.00 is 2.08 times the $38.46 an employee would receive for the same $80,000 a year. Whether a given worker is really a contractor or an employee is a legal question with its own tests; this calculator assumes you are genuinely self-employed and setting a price.
Testing the rate before you quote it
Run the numbers three ways. First, the floor: costs plus the lowest income you could live on, at a realistic 20 billable hours, tells you the rate under which a project loses money. Second, the plan: your real target and the billable hours you have tracked. Third, the market: compare the result with what clients in your field already pay for similar work, from quotes you have seen or lost. If the plan rate sits far above the market, the levers are fewer weeks off, more billable hours or lower costs, and the calculator shows which one moves the rate most. For employee pay in the other direction, the hourly to salary converter turns a wage into a yearly figure, and the salary to hourly converter does the reverse.