Step 1: Decide the income you want to keep
Start with the yearly take-home you need, not a rate you saw online. Include rent, savings and a holiday fund.
Step 2: Add business costs
Software, equipment, insurance, accounting and any platform fees. These come out before you earn a cent.
Step 3: Add tax
You need to earn enough before tax to keep your target after it. Run the figure through the take-home calculator for the US or UK and adjust until the net matches what you want.
Step 4: Count billable hours honestly
A 40-hour week rarely means 40 billable hours. Admin, proposals, calls and finding clients are unpaid, so many freelancers bill closer to 20–30. With 46 working weeks and 25 billable hours, you have 1,150 hours a year, not 2,000.
Step 5: Add a buffer
Slow months, late payers and negotiation room all cost money. A 10–20% buffer is a common starting point.
Worked example
Target income $60,000, expenses $4,000, 15% buffer, 1,150 billable hours: ($60,000 + $4,000) × 1.15 = $73,600, divided by 1,150 gives about $64 an hour. The hourly rate calculator does this instantly.
Step 6: Adjust for the platform
If you sell through Upwork or Fiverr, divide your target by one minus the fee so you net the rate you planned. See the Upwork fees guide.
Step 7: Sanity-check against the market
Compare the result with what clients actually pay for your skill. If your floor is above the market, specialise, raise the value of your work or cut costs. Never quietly drop below your floor.
Project pricing
For fixed-price work, estimate the hours, multiply by your rate and add a margin for revisions. That keeps every quote tied to your hourly floor.
Last reviewed October 2026. Figures are estimates for planning, not tax advice; see the disclaimer and methodology.