How does the Hourly Rate Calculator work?
Hourly rate = annual target ÷ (working weeks × weekly hours). Account for holidays and sick days via the working weeks.
Background & details
The hourly rate calculator shows two figures: the hourly rate you need and the resulting income per month. The key question is not “What do I want to earn?” but “How many of my hours are actually paid?” – that is exactly where most calculations fall apart.
How to read the result
The rate shown is a minimum rate to reach your annual target on paper, assuming every hour you enter gets sold. In reality, 40 billable hours a week is rare for the self-employed – sales, proposals, admin, learning and breaks are unpaid. Often only 20–30 billable hours a week are realistic. So set the weekly hours to your truly billable hours, not your total working time.
Gross is not net
As an employee a salary is already “clean”; as a freelancer you additionally carry:
- income tax and, where applicable, VAT to pass on
- your full health, pension and retirement provision
- business costs: software, hardware, office, insurance
- paid holiday and sick days that nobody gives you for free
A rough rule of thumb: your freelance hourly rate should sit noticeably above the equivalent employee figure – the gross salary is often doubled as a starting point to absorb all of this. So set your annual target higher from the outset.
Common mistakes
- Counting all 52 weeks: that leaves out holidays, public holidays and buffer. 44–46 weeks is realistic.
- Confusing working hours with billable hours: the most common and most expensive mistake.
- Staying too close to the market average: the calculator gives your floor – the market price can be higher, and that gap is your room to grow.
Practical tips
Run two scenarios: a conservative one with few billable hours and an optimistic one at full capacity. The gap shows how strongly your income depends on utilisation. For quotes a day rate or project price is often better than an hourly rate – but calculate it internally from this hourly rate so you don't undersell yourself.