Freelancers who price by dividing an old salary by 2,080 hours usually undercharge badly. A salary comes with paid holidays, an employer's share of payroll taxes, equipment and a full diary. Freelance income has to pay for all of that from billable hours only. This calculator starts from the income you want, adds your business costs, grosses it up for tax, and divides by the hours you can realistically bill.
Gross needed = (target income + yearly business costs) ÷ (1 − tax set-aside %). Billable hours = (52 − weeks off) × billable hours per week. Hourly rate = gross needed ÷ billable hours.
The tax figure is a set-aside percentage, not a tax calculation. In the US, self-employed people pay self-employment tax (Social Security and Medicare) on top of income tax; many set aside 25–30% of profit and adjust with their accountant. Use the percentage your accountant recommends.
Admin, invoicing, sales calls, proposals, learning and chasing payments are all work you cannot bill. Few full-time freelancers bill 40 hours a week; many bill 20 to 30. Start with an honest estimate from your last few months, not the hours you are at your desk.
Time off matters too. Public holidays, a couple of weeks of holiday, and a week of illness is already five or six weeks a year with no income.
Many clients prefer a project or day rate. Estimate the hours, multiply by your rate, then add a contingency for revisions and unknowns. Write the scope and the number of revisions into the quote so the price holds.
Market rates matter: if the number here is far above what clients in your field pay, the answer is usually a narrower niche, higher-value work, or lower costs — not a lower rate that does not cover your bills.
Enough to cover your target income, business costs and taxes from the hours you can actually bill. For example, $60,000 income plus $6,000 of costs with 25% set aside for tax, over 48 weeks at 25 billable hours, needs about $73 an hour.
Plan from your real numbers. Non-billable admin, sales and learning take a large share of a freelancer's week, which is why 20–30 billable hours a week is a common working figure.
Either can work. Hourly protects you when scope is unclear; project pricing rewards efficiency and is easier for clients to approve. Use your hourly rate to build the project price either way.