Updated · Built and checked by the PlinzoTools team, formulas tested against published sources
Calculate the hourly rate you need to charge to hit a target income after expenses.
$79.17
This tool works backward from your desired take-home income to the hourly rate you need to charge -- accounting for business expenses and the reality that not every working hour is billable.
Enter your desired annual income, annual business expenses, weeks worked per year, and billable hours per week. Your required hourly rate appears instantly.
Billable Hours per Year = Weeks Worked × Billable Hours per Week
Hourly Rate = (Desired Income + Business Expenses) / Billable Hours per Year
The calculator opens with sample values: a desired income of 80,000, business expenses of 15,000, 48 weeks worked per year, and 25 billable hours per week. Billable hours per year are 48 times 25, which is 1,200. The revenue you need is 80,000 plus 15,000, or 95,000, and dividing by 1,200 gives a required rate of about 79.17 per hour.
Now see how sensitive the answer is to billable time. If only 20 hours a week are billable, the year has 960 billable hours and the same 95,000 requires about 98.96 per hour. If you manage 30 billable hours, the year has 1,440 hours and the rate falls to about 65.97. Small changes in billable hours move the rate a lot, which is why being realistic about that input matters more than fine-tuning the others.
The number is a break-even rate for your stated goals, assuming every billable hour is actually billed and paid. In practice, some projects run over, clients pay late, and work slows down between contracts. Many freelancers treat the calculated rate as a floor and price above it to leave room for those gaps. Comparing your result with what similar professionals in your market charge is a sensible reality check; this tool has no market data and does not suggest what clients will pay.
Taxes, benefits and business structure differ by country and by whether you are a sole trader, contractor or company. For questions about what to set aside for taxes or how to treat expenses, speak with a qualified accountant.
Because not every hour is billable -- time spent on admin, marketing, and finding clients doesn't generate revenue directly, so it needs to be covered by the rate charged on billable hours only.
Not automatically. The formula divides desired income plus expenses by billable hours. If your income goal is meant to be after tax, increase the income figure or add a tax reserve so the resulting rate covers it.
Use what you can realistically invoice, which is often noticeably less than your total working hours. Tracking your time for several weeks gives a better number than a guess.
The tool needs weeks worked and billable hours per week to both be greater than zero, and all four fields to be valid numbers. Fix any empty or zero value to see the result.
You can estimate the hours the project will take, multiply by your required rate, and add a buffer for revisions and delays. The calculator itself only produces the hourly figure.
Reference: Consumer Financial Protection Bureau