by Rachel Smith
24 March 2022
Updated March 2022
Words may be your strong suit, but if you’re building a freelance business, numbers need to come a close second. The good news is, there are heaps of hourly rate calculators out there that take all the grunt work out of crunching the numbers and figuring out what to charge.
And working out your hourly rate, or ‘internal rate’, is one of the first things you need to do as a freelancer. Yes, even if you charge project fees and rarely (if ever) share your hourly rate with clients. Simply because it gives you a benchmark and a way to quickly figure out if something is worth your time.
For me, $30 an hour is not using my time effectively. It’s sending me straight to Two Minute Noodle Land and as a parent, I really need to be able to put decent food on the table. But offer me $100 an hour or more, and chances are, we’re in business.
So, how can you be sure you ARE using your time effectively and making money – enough money to live on and perhaps even a little extra to ensure you can travel, eat out, buy new underpants? Figure out what you need to charge as your ‘internal’ hourly rate (a rate you’d be happy to take, and which factors in super, expenses and so on).
To help you, we’ve rounded up some crackin’ hourly rate calculators to take for a test drive.
You might find if you use one of these, you need to raise your rates. Don’t panic! That’s a good thing, and the start of the year is a good time to do it with regular clients. For new clients, you can just quote your new rate.
If you want a tool that really gets into the nitty gritty, this is it. It’s split into sections such as Business Costs, Personal Costs (sadly, champagne is not an option), How Many Hours Can You Bill and your ideal Profit/Savings for the year. From here, it then calculates and hourly rate and a break even rate. Check it out here.
A super easy calculator that simply asks a couple of questions – the salary you’d like to make per year and how many hours of work per week ~ pop in billable hours here. It then spits out what you should charge as an hourly rate but also gives you an indication of weekly, monthly, daily amounts. The downside: it doesn’t take into account all your expenses. Check it out here.
It’s not so pretty to look at, but it does the job in 30 seconds flat. You use pull-down menus to enter your preferred annual salary, super, business costs, profit you’d like to make, holidays you’d like to take, sick leave and billable hours to get what you should be charging hourly. Check it out here
It’s not a calculator so you have to do the hard yards, but this infographic from Creative Live (a US based course platform) is super clear and eliminates the bad habit many freelancers have of simply ‘plucking a rate out of thin air’. It shows you how to start with your annual target salary, then add in all your business expenses such as web-hosting, internet, phone, tax, laptop depreciation etc. It also covers other costs of living (and this is where you’ll need to use your Aussie commonsense as it refers to US healthcare). You then get an adjusted salary (ie, your target salary + expenses). From there, you factor in your billable hours, allow for time to be spent on non-billable things and time off, and voila – you have your hourly rate. Check it out here.
This blog post was originally published in 2013. And yes, almost a decade later it is still just as relevant.