Freelance Rate Calculator

Direct answer

Add your annual revenue target and annual business costs, then divide by the billable hours you expect to invoice. The IRS notes that independent contractors may have unreimbursed expenses; this calculator lets you state that cost scope rather than assuming it.

Variables and formula

• Annual revenue target: the business revenue target before any tax calculation.
• Annual business costs: tools, insurance, marketing and other costs you choose to include.
• Billable hours: hours you expect to invoice in the same year.

Planning hourly rate = (Annual revenue target + Annual business costs) ÷ Billable hours

Reproducible example

For an $85,000 annual target, $15,000 of annual costs and 1,200 billable hours, (85,000 + 15,000) ÷ 1,200 = $83.33 per hour.

Interpretation

This is a planning floor for the scope you entered. The eight-hour equivalent is only a convenient comparison, not a required day rate or a prediction of demand.

Assumptions and limitations

• All amounts use one currency and one year.
• The billable-hours estimate excludes unpaid work unless you deliberately include it.
• The calculator does not calculate tax, employee classification, legal terms or a market price.

Common mistakes

• Counting every working hour as billable.
• Leaving out software, insurance or acquisition costs.
• Applying a generic rate to a client scope with materially different risk or effort.

Assumptions

• The revenue target is entered before any tax calculation.
• Every entered business cost belongs to the same year.
• Unpaid work, taxes, legal requirements, market demand and client-specific scope are outside this estimate.

Sources and methodology

CalcMotive publishes the formula and assumptions so you can decide whether the estimate fits your use case. See our methodology standards.

• Financial control; Internal Revenue Service; accessed Aug 17, 2026