Why your hourly rate needs to be higher than you think
- An employee's salary already has time off, sick days and non-productive hours priced in by their employer. A freelancer has to price all of that in themselves.
- Every week off, every non-billable hour spent on admin or marketing, and every business expense has to be recovered from the hours you actually bill.
- That's why a "simple" salary-to-hourly conversion (annual income ÷ 2,080 hours) almost always undercharges freelancers.
How to calculate your freelance hourly rate
The formula is: Hourly rate = (Desired income + Annual expenses) ÷ Billable hours per year, where Billable hours = Working weeks × Hours per week × Billable %.
Example: with 4 weeks off, 40 hours a week and 70% billable time, you get 48 working weeks × 40 hours × 0.70 = 1,344 billable hours. Add a €60,000 income goal and €1,200 in expenses, and the minimum rate is €61,200 ÷ 1,344 = €45.54/hour.
Why billable hours matter more than hours worked
This is the detail most freelancers skip. Not every hour you work is an hour you can invoice — proposals, invoicing, admin, marketing and unpaid client back-and-forth all eat into a working week without generating revenue. A freelancer working 40 hours a week at 70% billable is only invoicing 28 of those hours. If you price your rate off all 40 hours instead of the real billable 28, you'll fall short of your income goal even while "fully booked."
Getting your inputs right
Don't guess your billable percentage — track your actual time for a few weeks before trusting the 70% default here. Be honest about weeks off too: include sick days and slow periods, not just planned vacation. And list every recurring business expense, not just the big ones — software subscriptions and small tools add up over a year.
Don't anchor your rate on someone else's
A common mistake is picking a rate because it's what a friend charges, or what a forum post said was "standard" for the field. Two freelancers in the same field can have completely different real numbers behind them — different expenses, different income goals, different billable percentages — so the same market rate can be profitable for one and a loss for the other. Use other people's rates as a sanity check on what the market will bear, not as the actual input to your own math.
Rush jobs and platform fees: adjusting the number from here
The calculated rate is a floor for your regular work, not a fixed price for every job. Freelancers commonly add a 25-50% rush surcharge for short-notice work that forces other clients or plans to be rearranged — it compensates for the disruption, not just the hours. Separately, if you find work through a platform like Upwork, factor in its cut before you quote: Upwork can take up to 15% per contract, so a client-facing rate that looks profitable on paper can undershoot your real goal once the platform fee comes out of it.
Revisit the number, don't set it once and forget it
Your expenses change, your income goal changes, and your actual billable percentage shifts as your workload changes — a rate calculated at the start of the year on one set of assumptions can be quietly wrong by the end of it. Treat this as a number to recheck every few months, or any time something major changes (a new recurring expense, a slower quarter, a jump in your cost of living), rather than a one-time calculation you never revisit.