Freelance Hourly Rate Estimator
An SEO crossover tool with Upwork/freelancer intent to estimate freelance hourly rates.
Quick Use Samples
Your Financial Goals
Estimated Hourly Rate
To achieve your desired pre-tax income of $90,000, you need to generate $105,000 in revenue to cover this plus your $15,000 in business expenses. Based on 1200 billable hours per year, your base hourly rate should be $87.50. To also cover your superannuation of $9,900, your recommended hourly rate is $95.75.
(Includes superannuation)
(Excludes superannuation)
To earn $105,000 in revenue over 1200 billable hours.
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What is a Freelance Hourly Rate?
A freelance hourly rate is the amount of money a self-employed professional charges for one hour of their work. Unlike an employee's wage, this rate must cover not only their 'salary' but also all business expenses, taxes, superannuation, and time off. Setting the right rate is critical for running a sustainable freelance business.
Behind the Formula
The calculator determines your required total business revenue by adding your desired personal income to your total business expenses and superannuation contributions. It then calculates your total available billable hours for the year by subtracting weekends, public holidays, and personal leave from the total hours. Your required hourly rate is the total revenue needed divided by the total billable hours.
Expert Insights
- A common mistake for new freelancers is to simply divide their old salary by the number of hours in a year. This fails to account for non-billable time, expenses, and lack of benefits, leading to significant under-charging.
- Your 'billable hours' are almost never 40 hours a week. Time spent on marketing, admin, client communication, and professional development is essential but unpaid work that your hourly rate must cover.
- Don't be afraid to adjust your rate as you gain experience and demand for your services grows. Your rate should reflect the value you provide to your clients, not just the time you spend.
Actionable Tips
- Track your time meticulously for a month, separating billable client work from non-billable admin. This will give you a realistic 'billable efficiency' percentage to use in your calculations.
- Research what other freelancers with your skills and experience are charging. This market research provides a valuable benchmark to ensure your rate is competitive.
- Offer project-based pricing as an alternative to hourly rates. This focuses the client on the value and outcome you are delivering, rather than the hours you are working.
Real-World Examples
A graphic designer going freelance
A designer wants to earn the equivalent of an $80,000 salary. After factoring in $15,000 of expenses, super, and only being able to bill 25 hours a week, the calculator shows they need to charge over $85/hour.
An experienced IT consultant
A consultant has high demand and low overheads. They can charge a premium rate of $150/hour, allowing them to reach their income goals while working fewer hours.
A freelance writer under-charging
A writer is charging $50/hour but finds they are struggling financially. The calculator helps them realise that after accounting for expenses and non-billable time, their effective 'wage' is below the minimum wage.
Glossary of Terms
Billable Hours
The amount of time that can be directly charged to a client for work performed.
Non-Billable Time
Time spent on running your business that cannot be charged to a client, such as marketing, admin, or training.
Overheads
The ongoing expenses of operating a business, such as software subscriptions, insurance, and marketing costs.