Hourly Rate From Salary Calculator
Work backward from your desired annual income and business overhead to the hourly rate you need to charge, accounting for the fact that freelancers don't bill 100% of their working hours.
Working backwards from the salary you want
Overhead is added to the income you want to end up with, and the total is divided by the hours you can genuinely invoice:
billable hours = billable hours per week × working weeks
required rate = (desired income + overhead) ÷ billable hours
day rate = required rate × 8The defaults ask for $80,000 with $10,000 of overhead over 25 billable hours a week for 48 weeks. That is 1,200 hours carrying $90,000, so the rate is $75.00 an hour and $600 a day.
Why that is twice the salary equivalent
| Employed on $80,000 | Freelance, same target | |
|---|---|---|
| Hours the money covers | 2,080 | 1,200 billable |
| Costs paid by you | none | $10,000 |
| Hourly | $38.46 | $75.00 |
The 2,080-hour year behind a salary is 40 hours for all 52 weeks, and it is paid whether you are working, on holiday or off sick. Nothing pays for the other 880 hours of a freelance year: proposals, invoicing, dead weeks between contracts and the four weeks off built into 48. Your rate is what funds them, along with the benefits, equipment and employer-side contributions your old job absorbed.
Frequently asked questions
What hourly rate is equivalent to an $80,000 salary?
As an employee, $38.46 - that is $80,000 over 2,080 paid hours, unpaid leave included. As a freelancer wanting the same $80,000 plus $10,000 of costs from 1,200 billable hours, $75.00. Quoting the first figure is how contractors end up underpaid.
How do I turn my hourly rate back into a salary?
Multiply by the hours you actually bill, never by 2,080. At $75 across 1,200 hours you invoice $90,000, and after $10,000 of overhead that is the $80,000 you asked for, before tax.
What if I could bill 40 hours every week?
The same $90,000 over 1,920 hours drops the rate to $46.88. Be honest about whether every working hour really sells - if it does not, you have simply moved the shortfall out of sight.