Start with the year, not the hour
Most freelancers set a rate by looking at competitors and adding a little. That number has no relationship to the life the business has to support. Work backward instead: decide the income you want to take home, add business costs, allow for tax and profit, then divide by the hours you can actually bill.
The four inputs that matter
- Annual income goal: what you need to pay yourself.
- Annual business expenses: software, equipment, insurance, accountant and workspace.
- Billable ratio: the share of working hours a client will actually pay for.
- Working weeks: holidays, sick days and slow periods are real.
The formula
Billable hours equal hours per week times working weeks times billable ratio. Required revenue equals income goal plus expenses, divided by one minus profit margin. Your minimum hourly rate is required revenue divided by billable hours.
The free Freelance Pricing Calculator on Heylep uses exactly these inputs. Change any number and the result updates in the browser. Nothing is uploaded and there is no account to create.