Work out what to charge per hour based on your income goals, expenses, and billable time
Most freelancers, sole traders, and small business owners set their hourly rate by guessing at what sounds reasonable, then wonder why they are not covering their bills. A rate that actually works starts from your target income, adds what the business costs to run, and divides by the hours you can realistically bill, not the hours in a work week. The same calculation works whether you are self-employed, a contractor, or running a small service business, only the income target and expenses change.
A day rate is not simply your hourly rate multiplied by eight. Most freelancers charge a day rate at a slight discount to reward a client for booking a full day up front, but not so much that a string of day-rate bookings pays worse than hourly work would. A day rate of 6 to 7 times your hourly rate is a common middle ground. See freelance hourly rate vs day rate for how to pick the right one for a given client.
We add your desired income and business expenses to get the revenue you need, then divide it by your billable hours per year, which accounts for weeks off and how much of your working time is actually billable to clients.
Billable utilization is the percentage of your working hours that you can actually bill to clients, after accounting for admin, marketing, and other unpaid work. Most freelancers are billable 60 to 80% of their working time.
Multiply your hourly rate by 6 to 7 hours instead of a full 8, to account for the discount clients expect for booking a full day, and for the admin time a day booking still costs you.
Yes. This freelance hourly rate calculator is 100% free to use, with no sign-up required.
Yes. Sole traders, contractors, and small service businesses use the same formula as freelancers: desired income plus expenses, divided by billable hours. Enter your own numbers and the calculator works the same way regardless of how your business is structured.