The Freelance Rate Formula
Hourly Rate = (Desired Income + Expenses) ÷ (1 − Tax Rate) ÷ Total Billable Hours
This formula "grosses up" your target take-home income to account for taxes, then divides by realistic billable hours — not your total working hours.
Why Most Freelancers Underprice
The most common mistake is assuming 40 billable hours/week. In reality, most freelancers bill only 20-30 hours, with the rest going to admin, proposals, marketing, and client communication that isn't directly billable. Using 40 hours in your calculation can underprice your rate by 30-40%.
Frequently Asked Questions
Use the formula: (Desired Income + Expenses) ÷ (1 - Tax Rate) ÷ Billable Hours. Most freelancers should use 20-30 billable hours/week, not 40, since significant time goes to non-billable admin and marketing work.
Rates vary enormously by field: general freelancing averages $25-50/hour, while specialized fields like software development, design, or consulting can command $75-200+/hour.
Most freelancers realistically bill 20-30 hours/week even working full-time, since 30-50% of time goes to non-billable work like marketing, proposals, and admin tasks.