Not sure what to charge as a freelancer? This guide shows how to set a sustainable freelance hourly rate using income goals, expenses, and real billable hours — then verify it with a calculator.
Core method: (annual take-home goal + business expenses + tax cushion) ÷ annual billable hours = minimum hourly rate. Run the numbers in Round’s freelance rate calculator.
The rate formula
Minimum rate = (Target income + Expenses + Tax buffer) ÷ Billable hours
Billable hours are not 52 × 40. Vacations, sales, admin, and unpaid revisions shrink the denominator. Many freelancers plan around 45–60% utilization.
Step-by-step
- Set a take-home income goal for the year.
- Add annual business expenses (software, insurance, contractors, hardware).
- Add a tax buffer — use the self-employment tax estimator for a first pass.
- Estimate weekly billable hours × weeks you’ll actually work.
- Divide and round up to a clean client-facing number.
- Compare to market comps for your niche and seniority.
Example numbers
| Input | Example |
|---|---|
| Take-home goal | $80,000 |
| Business expenses | $12,000 |
| Tax buffer | $25,000 |
| Total to cover | $117,000 |
| Billable hours / year | 1,200 |
| Minimum hourly rate | $97.50 → charge $100–$110 |
Example only — replace with your figures in the calculator.
Hourly vs project pricing
Use hourly when scope is fuzzy. Use project or retainer pricing when deliverables are clear — but keep your hourly floor as a guardrail so fixed bids stay profitable. After you set the rate, create invoices that show line items clearly so clients understand the value.
Next step
Run the calculator once, write your floor rate down, and stop negotiating below it unless you are intentionally trading for a portfolio piece. Sustainable rates fund the business — undercharging is a cashflow bug, not a growth strategy.