Start with the income you want to keep
Most freelancers pick a rate by copying someone else's number or guessing what a client will accept. Both approaches ignore the only number that matters: the income you need to keep each month.
Start there instead. Decide what you want to take home each month — the amount that covers your living costs and leaves room to save. That target is the anchor for everything that follows; without it, any rate is just a guess.
A common mistake is to start from an old salary and divide by working hours. That ignores the costs a freelancer carries that an employee does not: unpaid time between jobs, your own tools and internet, no paid leave, and no employer covering part of your costs. A rate copied from a salary usually comes out too low.
Write the target down as a monthly figure before you touch any calculator. If you are not sure what it should be, add up your monthly living costs, add a buffer for quiet months, and use that total. It does not need to be perfect — it needs to be honest.
Count your real billable hours
Not every hour you work is an hour you can bill. Admin, replying to messages, pitching for work, learning new tools and waiting on clients all take time — and none of it appears on an invoice. If you divide your target by all your working hours, your rate will be too low to cover the hours you cannot charge for.
Count only billable hours: the hours a client actually pays for. For many freelancers that is noticeably less than the hours they sit at the desk. The honest way to find your number is to track one or two real weeks and count what was billable.
Be realistic about quiet periods too. A month with a gap between projects has fewer billable hours than a full month, and your rate has to carry you through both. Using a full, busy month as your baseline leaves nothing for the slow ones.
Once you know your real billable hours, the rate calculation becomes simple: the money you need, divided by the hours you can actually sell. Everything else is detail.
- Billable hours are the hours a client pays for.
- Admin, pitching and waiting time are real work, but they are not billable.
- Track a real week instead of guessing your billable hours.
Add your expenses
Expenses are the third piece of the calculation, and the easiest to forget. Software subscriptions, internet, a phone, hardware that wears out, payment fees — they all come out of what you earn, so they belong in the rate.
List your regular monthly expenses and add them to your income target before you divide by billable hours. A $100 monthly expense may look small, but spread over 100 billable hours it adds a full dollar to every hour you charge.
Some costs are irregular — a new laptop every few years, a course, a quiet month with no income. Spread those across the year as a monthly average rather than ignoring them until they arrive.
If your expenses change, your rate should change too. Recalculate whenever a major cost appears or disappears, not once a year.
A worked example: $1,500 a month
Put the pieces together with a worked example. Say your target is $1,500 a month to keep, your expenses are $100 a month, and you can bill 100 hours in the month. The calculator works backwards from those figures and gives an hourly rate of about $18.52.
Notice that the answer is higher than a simple division would suggest — and that is the point of working backwards from your target instead of guessing a round number. The rate has to carry your income, your expenses and the hours you cannot bill, all at once.
The same approach works in reverse for invoices. If you want to keep a set amount after a platform or payment fee, a reverse invoice tells you what to quote so the fee comes off the top and you still land on your target. Enter your own fee rates, since they differ by platform and payment method.
Run your own numbers through the calculator and save the result. That rate is your floor: the number below which a job costs you money. You can charge more for rush work, difficult clients or specialist skills — but never less than the floor without knowing it.
- Target: $1,500 a month to keep.
- Expenses: $100 a month.
- Billable hours: 100 a month.
- Rate: about $18.52 an hour.
The bottom line
A good freelance rate is not a guess and not a copy of someone else's number. It is your target income plus your expenses, divided by your real billable hours. Work it out once, check it when your costs change, and let it set the floor for every quote you send.
