KLOORAHow Much Should a Freelancer Charge Per Hour? A Formula
Published 1 November 2026 by Kloora Tools
Quick answer: divide the income you need before tax and costs by the hours you can actually bill. If you want 100,000 take-home, have 20,000 in business costs and set aside 10 percent for tax, you need about 133,333 in revenue. At 90 billable hours a month that is roughly 1,482 per hour. Convert your own salary target with the free Salary and Hourly Converter.
What is the formula for a freelance hourly rate?
Hourly rate = (desired take-home + business costs) / (1 - tax and savings rate) / billable hours
Each part matters:
- Desired take-home: what you want in your pocket each month.
- Business costs: internet, software, equipment, coworking, marketing, accounting.
- Tax and savings rate: a percentage you set aside for tax, health and slow months.
- Billable hours: hours you invoice, not hours you work.
Why are billable hours lower than working hours?
Freelancers spend time on finding clients, emails, invoices and learning. A common planning figure is that only half to two thirds of working time is billable. A 40-hour week might yield 20 to 25 billable hours, so about 90 hours a month.
Worked example
- Desired take-home: 100,000 per month
- Business costs: 20,000 per month
- Tax and savings: 10 percent
- Billable hours: 90 per month
Revenue needed = (100,000 + 20,000) / 0.90 = 133,333. Hourly rate = 133,333 / 90 = about 1,482.
| Billable hours/month | Hourly rate needed |
|---|---|
| 60 | 2,222 |
| 90 | 1,482 |
| 120 | 1,111 |
Fewer billable hours means a higher rate. Use the table to see how realistic your plan is.
How do you convert an annual salary to an hourly rate?
A rough rule: annual salary / 2,080 hours (40 hours x 52 weeks) gives an employee hourly figure. A freelancer should charge more than that, often 1.5 to 2 times, to cover leave, tools, tax and idle time. If a job pays 1,200,000 a year, that is 577 per hour. A freelancer doing the same work should look at 870 to 1,150 and then adjust.
Hourly, project or retainer pricing?
- Hourly: simple and safe when scope is unclear.
- Project (fixed price): better when you are fast, because the client pays for the result. Estimate hours, multiply by your rate and add 20 percent for revisions.
- Retainer: a monthly fee for steady work, which stabilises income.
How do you raise your rates?
Raise rates for new clients first. Add 10 to 20 percent when you are fully booked. Give existing clients a month's notice. Show value in results, not hours. Keep samples and case studies updated.
What should an invoice include?
Your name, client, date, a description of work, hours or fixed price, payment terms and bank details. The Invoice Generator makes a clean PDF. For margins on products, use the Profit Margin Calculator.
Try it now
Test your numbers in the Salary and Hourly Converter.
Frequently asked questions
How do I calculate my freelance hourly rate?
Add your target take-home and business costs, divide by one minus your tax rate, then divide by your billable hours.
How many billable hours should I plan per month?
A common planning figure is 20 to 25 billable hours per week, or about 80 to 100 per month.
Should freelancers charge more than employees?
Usually yes, often 1.5 to 2 times the employee hourly figure, to cover tax, leave, tools and unpaid time.
Is hourly or fixed price better?
Hourly is safer when scope is unclear. Fixed price rewards speed when you know the work well.
How often should I raise my rates?
Review at least once a year, and raise sooner when you are fully booked.
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