How to Calculate your Hourly Rate as a Freelancer

Katharina Lindebner - 26/03/2020 - 0 comments

How to Calculate your Hourly Rate as a Freelancer

Independent on your profession – IT, SEO-marketer or graphic designer each freelancer has to think of the same question – the hourly rate.  

The calculation of your hourly rate is not only the money your project partner has to pay it is much more than that, it also affects your lifestyle and the quality of your life. Apart from that as freelancer you have to consider additional costs as for example insurance expenses and there will be hours you won’t be able to bill like administrative work. Especially for new freelancers the appropriate hourly rate calculation will be challenging, but if you keep the following points in mind you are on the right track.

Your hourly rate depends on following points: 

  • Your experience
  • The field you are working for
  • How much do you want to earn per month?
  • How much do your competitors charge?
  • How many days / hours per week do you want to work?

However how can you calculate your hourly rate?

Maybe you start with thinking how much money you want to get in one month. Then you have to add all your fixed expenses and this is the amount you should earn in one month. 

Step 1:

Think of the desired income you want to have after tax

Step 2:

Be aware of your expenses:

- telephone / internet / hosting provider
- rent
- computer
- software subscriptions
- office equipment
- expenses for travel
- taxes

Step 3:

Calculate your billable hours and keep in mind that not each hour is billable.

We suggest to start with the number of days you want to work per year.
Therefore you also have to consider:
- days of illness
- days for further education
- holiday times
- the number of billable hours per day / week
- Do you have to travel for business?

Type of days

  • days per year
  • Do you want to work on weekends?
  • public holidays
  • How many days of holiday do you want to have?
  • Calculate 2 weeks of illness
  • = number of working days

average days per year

  • 365 days
  • - 104 days
  • - 10 days
  • - 25 days
  • - 10 days
  • = 216

Our tip is better to start calculating with less billable days to be safe with your calculation. 

Now think of the amount of hours you can calculate per day and then do the calculation:

Calculation of working days

  • Number of working days
  • / 52 weeks
  • = 4,15 days per week
  • * average billable days per week
  • = billable working hours

Step 4:

Calculation of your hourly rate

Hourly rate calculation

  • Desired income after tax
  • + all your expenses
  • = money you should earn
  • / billable hours
  • = your hourly rate

We recommend to use your personal time for your calculation, because numbers will be different from freelancer to freelancer. 

All in all please think of the reason why you wanted to get a freelancer and I am sure no one started a business to work for underpaid or even for free, so it is really important to know your minimum hourly rate.

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