How do I calculate my freelance hourly rate from a desired salary?
Take the yearly income you actually want to end up with, add the business costs and benefits a salaried job would otherwise cover for you, and divide by the hours you can realistically bill, not your total working hours. That last part is where most freelancers get the number wrong, because billable hours are always a fraction of total hours once admin, proposals, and the slow weeks are in the picture.
Your hourly rate isn't your target salary divided by 2,000 hours. That math only works for someone who bills every hour they work, and no freelancer does.
Start with the income you actually want, not a vague "more than my old job"
Pick a real number: the yearly income you want to land on after the business pays for itself. Not your old salary, not a round number that feels ambitious, the actual figure you'd be happy taking home this year. Everything below builds on top of that number, so it's worth taking a minute to get it right instead of guessing.
Add back what a salaried job was quietly covering for you
A salary isn't just the number on your payslip. It usually comes with paid time off, a pension contribution, and taxes that get handled automatically. As a freelancer, your hourly rate has to cover all of that yourself, on top of the actual business costs: software, equipment, insurance, the odd slow month. None of that disappears just because nobody's itemizing it on a payslip anymore, so add a buffer on top of your target income for it rather than pricing as if it doesn't exist.
Divide by billable hours, not total working hours
This is the step that quietly wrecks the number for most people. A full-time year has roughly 2,000 working hours, but you won't bill anywhere close to that. Time spent on proposals, admin, client calls that don't lead anywhere, and the gaps between projects all come out of the same calendar, and none of it is billable. Divide your target income by a realistic billable-hours estimate instead of your total hours, and the rate goes up, often by a lot more than people expect the first time they actually run the numbers.
Run it, then sanity-check it against the market
Once you've got a number, hold it up against what people doing similar work actually charge. If you're wildly above the market, your billable-hours estimate is probably too conservative. If you're wildly below it, you've likely underestimated what the job should cover. The calculation gets you to a defensible starting point, not a number you're locked into forever.
Steadytrack's pricing calculator runs this exact calculation for you, starting from the income you want and working back to an hourly rate, so you don't have to rebuild the formula by hand every time you want to check your number.
Set the right price and send a professional proposal, without the guesswork.