Toolivaro

Free Billable Hourly Rate Calculator

Set a freelancer or agency hourly rate that covers your target income, overhead, taxes, and unpaid time.

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Income you want to keep.

Software, insurance, coworking, marketing.

Hours actually invoiced — not desk hours.

Paid and unpaid time off.

Total effective load as a percentage.

How is the result calculated?

Freelance pricing: 100,000 target, 10,000 overhead, 30 billable hours

You want $100,000 of income, spend $10,000/year on overhead, plan 2 weeks off, bill 30 hours per week, and estimate a 30% effective tax load. Working weeks: 52 − 2 = 50; billable hours: 50 × 30 = 1,500. Pre-tax target: 110,000 / 0.7 ≈ $157,143. Rate: 157,143 / 1,500 ≈ $104.76/hour. Notice the same target at 20 billable hours per week costs $157/hour — billable hours move the rate more than any other input.

Input Value
targetIncome 100000.00
annualOverhead 10000.00
billableHoursPerWeek 30
weeksOff 2
taxPercent 30
Result ≈ $104.76/hour at 1,500 billable hours/year

What is the formula and its assumptions?

Working weeks

working weeks = 52 − weeks off

Symbol Meaning
weeks off paid and unpaid time off per year

Billable hours per year

billable hours = working weeks × billable hours per week

Symbol Meaning
billable hours per week hours actually invoiced, not desk hours

Hourly rate

rate = (target income + overhead) / (1 − tax% / 100) / billable hours

Symbol Meaning
target income annual income you want to keep
overhead annual business costs
tax% effective tax and benefits percentage
billable hours hours you can actually invoice

The (1 − tax%) division grosses the target up so the rate still delivers the target income after taxes.

What are the most common mistakes?

  • Pricing from desk hours instead of billable hours, producing a rate that cannot meet the income target.
  • Using marginal tax rate instead of effective load, which underestimates what taxes consume.
  • Ignoring unpaid time (sales, admin, holidays) — two weeks of time off plus weekly admin can cut billable hours by 20% or more.

What are the assumptions and limitations?

  • The estimate assumes your billable hours and tax load hold for a full year; a mid-year price change is normal as those assumptions firm up.
  • This is a pricing-planning estimate, not tax, legal, or financial advice.
  • Market rates and client budgets may cap what you can actually charge — the calculator sets a floor, not a guarantee.

Where do the numbers come from?

Last reviewed August 4, 2026 · Version 1.0.0 · Toolivaro does not guarantee external content.

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Frequently asked questions

Why are billable hours so much lower than my desk hours?

Admin, proposals, sales, meetings, and learning rarely get invoiced. Freelancers commonly bill 50–70% of their desk hours. If you assume 40 billable hours but only achieve 25, the rate you set is too low to meet your target.

What should I use for the tax percentage?

Your effective load — total income tax, self-employment or payroll tax, and benefits like health insurance you must buy yourself, as a percentage of gross income. Use the number from last year’s return rather than a guess at a marginal rate.

Should my rate equal this calculator’s output?

Not necessarily — the market sets the ceiling. Use the result as the floor for negotiations: it is the rate that actually covers your target income, overhead, taxes, and time off. Charging below it means silently subsidizing clients.

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