Vectix Logic guide
How to Calculate Your Freelance Hourly Rate
Build a rate from the income, costs and billable time your freelance business actually needs.
Start with the income the business must support
Choose a realistic annual personal income before looking at market rates. This is the amount the business needs to make available for you before personal taxes. It should reflect your living costs, experience and the stability you need.
Add annual business expenses such as software, equipment, insurance, professional fees, marketing and training. A rate that covers only your pay makes every business cost compete with your personal income.
Use billable hours, not total working hours
Freelancers spend time on proposals, bookkeeping, client communication and business development. Multiply working hours per week by working weeks per year, then by the percentage you can invoice.
For example, 40 hours across 48 weeks is 1,920 working hours. At 60% billable, only 1,152 hours are available to carry the annual revenue target.
Add a reserve and test the result
A reserve can fund slower periods, replacements or future investment. Divide the base revenue target by one minus the reserve percentage. Do not simply add the percentage, because the reserve is intended to be a share of final revenue.
Compare the result with project risk, demand and the value of the work. The calculation is a sustainable floor for planning, not a rule that replaces commercial judgment.
This guide provides an estimate framework, not financial, tax or legal advice.