How to Calculate Your Hourly Rate as a Freelancer

Two freelancers with identical income goals, expenses, and tax rates can need completely different hourly rates — the deciding factor is how much of their working time actually gets billed to a client versus spent on proposals, admin, and marketing.

Step 1: Find Your Billable Hours

Billable Hours = (52 − Weeks Off) × Hours Per Week × Billable Percentage

On 40-hour weeks with 4 weeks off, at 70% billable time, that's 1,344 billable hours a year — well short of the 2,080 hours a full-time employee's calendar implies, since employees don't lose calendar time to unpaid admin the same way.

Step 2: Divide Required Revenue by Billable Hours

With the same $91,714.29 in required gross revenue, changing only the billable percentage:

• 90% billable (1,728 hours): rate = $53.08/hour
• 70% billable (1,344 hours): rate = $68.24/hour
• 50% billable (960 hours): rate = $95.54/hour

Dropping from 90% to 50% billable time — half the working hours going to non-billable work instead of a tenth — very nearly doubles the required rate. Billable percentage isn't a minor adjustment; it's one of the biggest levers in the whole calculation.

Why Billable Percentage Varies So Much

A freelancer with a steady pipeline of repeat clients might genuinely hit 85-90% billable time, since there's little time spent chasing new work. Someone actively building a client base, or working in a field that requires heavy proposal writing and revisions, often lands closer to 50-60%. Being honest about this number — rather than assuming an optimistic 90% by default — is what keeps the calculated rate realistic.