Minimum
$95/hr
Covers owner draw and core expenses. Floor, not quote.
Calculator
Freelance Hourly Rate Calculator
Calculate the hourly rate you actually need to charge after expenses, tax reserve, savings, unpaid work, and slow-month buffer.
This is the flagship OwnerMath tool because it gives you the baseline number everything else depends on: quotes, retainers, revenue targets, and whether your current pricing is quietly eating you alive.
What this includes
- Desired owner draw plus real monthly business expenses
- Tax reserve and long-term savings reserve
- Slow-month buffer so one wobbly quarter does not body-check your cash flow
- Realistic billable capacity instead of salary math wearing a fake mustache
Use this when...
- You need a baseline before quoting projects or retainers.
- You are resetting rates after realizing your current one feels suspiciously polite.
- You want a revenue floor that includes unpaid work instead of pretending it is free.
Do not use this for...
- Pricing a scoped fixed-fee proposal without using the project quote math after this.
- Auditing what a finished project actually earned. Use the Effective Hourly Rate Calculator for that.
- Replacing tax advice, legal advice, or a CPA who has seen your actual books.
Sanity-check assumptions
Keep these visible while you fill the calculator out.
If your inputs assume permanent 30-hour billable weeks, microscopic expenses, and zero buffer, the spreadsheet is not helping. It is enabling.
- 20-25 billable hours per week is normal for many solo operators.
- 46-48 working weeks is more believable than 52 weeks of flawless output.
- Tax reserve often lands around 25-30% as a planning baseline.
- Savings plus slow-month buffer should exist unless chaos is your retirement plan.
Result
Healthy rate: $134/hr
This is the hourly floor that covers owner draw, expenses, tax reserve, savings, and a slow-month buffer before pricing strategy gets fancy.
Premium quote rate suggestion: $145/hr
Rate tiers
Sustainable
$116/hr
Adds tax reserve. Better, but still not much slack.
Healthy
$134/hr
Adds tax, savings, and slow-month buffer. Default target.
Premium
$145/hr
Healthy plus quote buffer, rounded for proposals.
Revenue targets
- Annual gross revenue required
- $160,840
- Monthly revenue target
- $13,403
- Weekly revenue target
- $3,351
- Annual billable hours
- 1,200
- Monthly billable hours
- 100
Verdict: Healthy
This is workable. Quote from healthy or premium, and keep minimum in the basement where it belongs.
Next actions
- Set project minimums (now): Turn your healthy rate into a project minimum next. Hourly is math. Quotes are strategy.
Assumptions used
- Capacity mode: direct
- Billable hours definition: Invoiceable hours only
- Tax reserve: Planning reserve input, not tax advice
- Premium uplift: 10%
- Rounding policy: Quote rates round to nearest 5 below 150, nearest 10 at 150+
Breakdown details
| Annual expenses | $14,400 |
|---|---|
| Monthly billable hours | 100 |
| Annual billable hours | 1,200 |
Educational estimate only. Not tax, legal, accounting, or investment advice.
What the number means
The healthy rate is the hourly floor your business needs to charge to cover owner draw, expenses, reserves, and a little reality. The premium rate is the quote-ready version for work with more complexity, urgency, or negotiation drag.
If the result is higher than expected, that usually means your old rate was undercounting unpaid work or pretending tax and buffer money would somehow materialize later. That is not a pricing opinion. That is the math returning your call.
How to use the output without doing something dumb
- Minimum: survival floor. Keep it in the basement where it belongs.
- Sustainable: less fragile, still thin.
- Healthy: default target for most quoting decisions.
- Premium: use when scope complexity, urgency, or negotiation risk is higher.
- Warnings: read them. They exist to catch fragile assumptions before a client project does it more expensively.
- Next actions: use the result to price a project, package a retainer, or fix a rate that is clearly below healthy.
Why your hourly rate is not salary ÷ 2,000
Salary math assumes employer-paid overhead, predictable utilization, and paid downtime. Freelance work has none of that. Your billable-hours assumption is doing parkour over reality if it ignores admin, sales, revisions, and client delays.
Formula and assumptions
Healthy revenue need = owner draw + annual expenses + tax reserve + savings reserve + slow-month buffer. Healthy rate = healthy revenue need ÷ annual billable hours. Premium rate applies quote uplift and practical rounding for proposals.
What counts as billable time
Only invoiceable client delivery time counts. Internal ops, client comms, proposal writing, context switching, and fixing scope drift are real work but not automatically billable.
Common mistakes this calculator catches
- Unrealistically high billable hour assumptions.
- Too little tax reserve, savings reserve, or slow-month buffer.
- Expense inputs that look suspiciously low.
- Current rates that force impossible weekly billable targets.
At this rate, you are not running a business. You are subsidizing clients with extra steps.
What to do if your required rate feels too high
Cut unhelpful scope, tighten positioning, package offers better, and raise rates on new work first. This is not a pricing problem. It is a future burnout problem if the current numbers require heroic utilization.
Natural next steps
Once you have the hourly floor, use it in the tool that matches the job. Price a fixed scope with the Project Quote Calculator , package ongoing work with the Retainer Pricing Calculator , and audit whether recent work actually paid off with the Effective Hourly Rate Calculator .
If you want the plain-English version first, read the hourly rate guide , then move to the fixed-price quote guide or the retainer guide once you are ready to turn the floor into an actual offer.
FAQ
How do I calculate my freelance hourly rate?
Start with desired owner draw and annual business expenses, add tax/savings/buffer reserves, then divide by realistic annual billable hours. That gives you the healthy baseline.
What counts as a billable hour?
Only time you can invoice. Admin, sales calls, internal planning, revisions beyond scope, and context switching overhead are working time but not billable time.
Should freelancers charge hourly or by project?
Use hourly math to protect margins, then translate that floor into scoped project pricing. Hourly gives you a denominator. Project pricing gives clients outcomes.
What is a healthy freelance hourly rate?
In this calculator, healthy means owner draw + expenses + tax reserve + savings reserve + slow-month buffer. It is usually the best default target for new quotes.
How many billable hours per week should I assume?
Most solo operators land below 30 true billable hours on average. If your assumption is above that, pressure-test it against your recent invoiced weeks.
Should I include taxes in my hourly rate?
Yes. This tool uses a planning tax reserve input so tax obligations are represented in your required revenue before pricing decisions.
Why is my required hourly rate higher than expected?
Usually because real billable capacity is lower than expected and reserves were missing. It feels high because optimistic assumptions were doing invisible subsidizing.
What should I do if clients will not pay my calculated rate?
Tighten scope, improve offer packaging, reduce unnecessary expenses, or move upmarket. Do not fake the denominator to force a comforting rate.
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Disclaimer
Educational estimate only. Not tax, accounting, legal, or investment advice. Use it to make better decisions, then verify critical assumptions with professionals where needed.