Freelance hourly rate calculator
Want to know how much you should be charging as a freelancer or service-based small business owner? Use our calculator to work out what your hourly rate needs to be. We’ll help you calculate your REAL hourly fee to ensure you earn the annual salary you need and deserve, and avoid under-charging.
Why you need to know your freelance hourly rate
If you’re a freelancer or a service-based small business owner, it is important to know what your hourly rate is, as this is, in effect, your ‘product’.
When you are working out how much you will charge a client or customer, you’ll base your quote at least partly, if not mostly, on your hourly rate. However, many people find this difficult to work out. So we thought we’d take you through the process and give you a freelance hourly rate calculator to make it as easy as possible for you.
How to work out your freelance hourly rate
There are five figures you need to know in order to work out your freelance hourly rate:
- How much you need or want to earn a year
- How many hours a day you can work
- How many days a week you can work
- How many weeks a year you can work
- Your annual expenses
Here’s why you need to know each.
1) How much you need or want to earn a year
In order to calculate your hourly rate, you first need to know what income you need or want to earn a year. Without this starting point, you risk setting an hourly rate that makes it impossible to achieve your desired income.
2) How many hours a day you can work
How many hours a day do you want to work? Are you reasonably able to put in eight slid hours of graft? Or do you need to structure your work around other commitments, such as school or nursery hours?
3) How many hours a day you can work
The next thing you need to consider is how many days a week you can work. For example, do you want to work just a four day week? Or are you prepared to work a six day week?
4) How many weeks a year you can work
You also need to consider how many weeks a year you want (or are able) to work. If you work for an employer, they will include a certain number of weeks’ holiday. And as a freelancer or small business owner, you need to consider the same.
At the very least, you might want time off for Christmas and a summer break. And if you have school-age children you might want to work around the school holidays.
5) Your annual expenses
As a freelancer or service-based small business owner, you will have a number of expenses you need to factor in when working out what to charge clients. These will be business running costs, such as WiFi, printer ink and paper, your phone contract, office rent, etc.
It’s these expenses that too many freelancers forget to include when working out their hourly rate. But I you don’t factor them in, you’ll never reach your desired annual income.
How to calculate your hourly rate using these figures
When you know all these figures, what do you do next? Here’s the calculation you need to make: Multiply your hours by your days by your weeks to get the total hours a year you can work. Here’s an example:
6 hours a day x 4 days a week x 40 weeks a year = 960 hours a year.
Next you need to know how much you need to earn a year. This is your desired salary plus expenses. Here’s an example:
£35,000 salary plus £5,000 expenses = £40,000 a year.
Finally, you divide how much you want to earn a year by the number of hours you can work a year to get your hourly rate. Here’s an example:
£40,000 a year divided by 960 hours = £41.66 an hour.
Once you know your true freelance hourly rate you can quote for jobs and contracts with confidence and ensure you earn what you need and deserve.
To make it really simple to work out your freelance hourly rate, we recommend you use our done-for-you calculator above.
Like this calculator? Try our free online VAT calculator too.