Bonsai
Contracts, proposals, and invoicing built for freelancers.
Visit tool →Freelance Hourly Rate Calculator
Hourly rate that backs into an annual income goal after realistic billable hours.
Calculator
Required hourly rate
$127.27/hr
Results are simplified estimates for educational purposes only and should not be treated as financial, accounting, legal, or tax advice. See our disclaimer for details.
Overview
Translate take-home ambitions into hourly pricing only after you shave hours for taxes, holidays, biz dev, edits, and sales calls. Forty-hour weeks are rarely forty billable.
Formula
Annual income goal ÷ billable hours per year. Exclude hours you simply cannot invoice.
Example calculation
Using the default example values from the JSON seed for this tool:
- Annual income goal
- 140000
- Billable hours per year
- 1100
Result: $127.27/hr (Required hourly rate)
How to interpret this result
Implied hourly rate from annual income goal and billable hours capacity.
It does not add overhead for taxes, benefits, or non-billable admin unless you lower billable hours.
Raise hours or lower goal to see how sensitive the rate is.
When to use this calculator
- When your rate feels low but you cannot point to which cost you forgot
- Before you quote a retainer that assumes a fixed number of billable hours
- When taxes, software, and unpaid admin are real and need a home in the math
- When you move markets or currency and need a fresh hourly floor
Rule of thumb
Billable hours are usually far below “40 hours a week.” If you skip admin and taxes, the rate will look artificially low.
Terms used in this calculator
- Conversion rate
- Share of a clear baseline group—visits, sessions, leads—that finished the goal you named.
- CPC
- What you paid on average for one ad click.
- ROI
- Return compared to everything you counted as investment—often wider than ads alone when people say "full ROI."
Common mistakes
- Underestimating admin, sales, and vacation time in “billable” hours.
- Treating revenue goal as take-home pay before taxes.
- Ignoring currency or FX for global clients.
What to do next
Layer project pricing afterward if most work is scoped as fixed fee.
How to improve this result
- Add vacation, sickness, sales calls, and admin into “non-billable” before dividing goals.
- Separate business expenses and taxes from your personal draw when naming targets.
- Use project pricing when scopes vary wildly—hourly hides scope risk poorly.
Recommended tools
Useful tools for this calculator
These tools are related to the topic of this calculator. Some links may be partner links.
ProfitWell
Pricing and retention resources for subscription businesses.
Visit tool →Wave
Free invoicing and accounting tools for small businesses.
Visit tool →FAQ
- Should taxes live here?
- Lower billable hours or raise the goal—they model tax drag better than multiplying hourly by a magic factor at the end.
- Currency conversions?
- Convert once upfront; bouncing FX mid-year needs a fresh run.
- Does this replace project quotes?
- No—jump to project pricing when fixed fees absorb scope risk.
- What about subcontractors?
- Add their lift to your overhead goal or hourly floor before quoting.
- Why does the rate spike when hours drop?
- Math is ruthless—fewer invoiceable hours need higher dollars per hour to hit income.
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Open calculator →Affiliate disclosure
Disclosure: Some links on this page may be affiliate links. If you sign up or make a purchase through these links, FounderCalc may earn a commission at no extra cost to you. We only recommend tools that are relevant to the calculator topic.