Free tool · no signup
What should your hourly rate be?
Start from the income you want, not from what others charge. Enter your target, the hours you can realistically bill, your overhead, and a tax reserve, and get the minimum rate that makes the year work.
Runs in your browser · nothing uploaded · no account needed
Hourly rate calculator
Minimum hourly rate
$91.00/hr
Rounded up to the next whole dollar. Price above this, never below.
Day rate (8 h)
$728.00
Billable hours / year
1,288
46 working weeks × 40 h × 70%
Revenue needed / year
$117,111.11
Income grossed up for tax, plus overhead.
Revenue needed / month
$9,759.26
Runs in your browser. Nothing is saved or sent. USD shown; the math is currency-agnostic.
How to use it
- 01
Enter the take-home income you need
The amount you want left for yourself after business costs and tax — the number you would compare with a salary.
- 02
Add overhead and a tax reserve
Overhead is software, insurance, equipment, and accounting for the year. The tax reserve is the share of profit you set aside for income and self-employment tax; 25–35% is common for independents.
- 03
Be honest about billable hours
Weeks off includes holidays, sick days, and slow weeks. Billable percent is your utilization — the share of worked hours a client actually pays for. 60–80% is typical.
- 04
Read the floor, then price above it
The result is the minimum rate that covers your year. Market positioning, specialization, and demand set how far above it you can go.
How the calculator works
Required revenue = target income ÷ (1 − tax reserve) + overhead. Overhead is deductible, so it is added after the gross-up. Billable hours = (52 − weeks off) × hours per week × billable percent, rounded down to a whole hour. The hourly rate is required revenue divided by billable hours, rounded up to the next whole dollar — a rate is a floor, not an estimate.
All arithmetic is done in whole cents and whole hours; nothing is stored or sent anywhere. The day rate shown is simply eight times the hourly rate.
Common questions
Why is the rate higher than my old salary divided by 2,080?
Because you will not bill 40 hours a week for 52 weeks. Once holidays, sales, admin, and gaps between projects are counted, most independents bill 1,200–1,500 hours a year, and every unbilled hour has to be paid for by a billed one.
What tax reserve should I use?
It depends on your country and structure. Many US-based independents reserve 25–35% of profit for federal, state, and self-employment tax; ask an accountant for your situation. The calculator treats the reserve as a share of profit, not of revenue.
Does the calculator store my numbers?
No. It runs entirely in your browser; nothing is uploaded, saved, or sent to Hoursmith.
Should I charge the same rate to every client?
Not necessarily. Many professionals keep a retainer rate, a project rate, and a rush rate. Billing tools handle this by setting the rate per project, so each hour is priced correctly without thinking about it.
Related
Now make sure every billable hour gets invoiced.
A good rate only pays if the hours are tracked and billed. Hoursmith prices tracked time at each project's rate and pulls unbilled hours straight into invoices. Free for up to 3 members.
Free for up to 3 members · No credit card · Cancel any time