Figure out exactly what to charge per hour to hit your income goals.
We start with your desired take-home income, add your business expenses, then gross it up for taxes. That total is divided by your realistic annual billable hours (weekly billable hours × weeks worked) to get your break-even-plus-profit hourly rate.
Most new freelancers price off a 40-hour week, but only a fraction of those hours are actually billable — the rest goes to admin, proposals, marketing, and finding clients. Underestimating this is the single biggest reason freelancers underprice their work.
As a freelancer, you're responsible for self-employment tax on top of income tax — often 25-30% combined depending on your bracket and state. Your hourly rate needs to gross up for this, or you're effectively working for less than you think.
Say you want to earn $70,000 a year, expect $8,000 in annual business expenses, and can realistically bill 25 hours a week for 48 weeks (1,200 billable hours) — well below your 40-hour week once you subtract admin, marketing, and time off. Target income plus expenses ($78,000) divided by billable hours gives a rate of $65/hour, not the $33.65/hour you'd get dividing salary by all 2,080 working hours in a year.
What's a realistic number of billable hours per week? Most experienced freelancers land between 20-30 billable hours out of a 40-hour week once you account for admin, sales, and client communication. New freelancers often start lower.
Should I charge hourly or project-based? Hourly is simpler to calculate and protects you on scope creep. Project-based can earn more if you're fast, but requires accurately estimating time up front. Many freelancers use this calculator to set an hourly baseline, then price projects off that number.
How often should I raise my rate? Common practice is reviewing rates annually, or any time your skills, demand, or cost of living materially shifts. If you're consistently fully booked, that's a signal you're underpriced.