What hourly rate should a freelance developer charge to earn $60,000 a year?
To take home $60,000 a year after $5,000 of costs and 25% tax, billing 25 hours a week for 46 weeks, you need to charge $75.36 an hour ($602.90 for an 8-hour day).
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The numbers for these inputs
| Billable hours a week | Hourly rate | Day rate (8 hours) |
|---|---|---|
| 15 hours | $125.60 | $1,004.83 |
| 20 hours | $94.20 | $753.62 |
| 25 hours | $75.36 | $602.90 |
| 30 hours | $62.80 | $502.42 |
| 35 hours | $53.83 | $430.64 |
| 40 hours | $47.10 | $376.81 |
How it works
Start from the income you want to keep, add your business costs, and gross it up for tax: revenue needed = (income + costs) / (1 - tax rate).
Then divide by the hours you can actually bill in a year: billable hours per week x (52 - weeks off). Not every hour of work is billable, so the figure for hours is lower than the hours you work.
The tax rate is a simple average of what you expect to pay on your profit, including social contributions. It is an estimate; ask an accountant for your real figure.
Common mistakes
- Counting every working hour as billable and forgetting admin, sales and unpaid gaps between projects.
- Forgetting holidays, sickness and bank holidays.
- Pricing from a salary: a freelancer also pays for equipment, software, insurance and pension.
- Not including tax, so the take-home is far below the target.
Questions
What hourly rate do I need?
$75.36 an hour, on 1,150 billable hours a year.
How much revenue do I need in a year?
$86,667: the $60,000 you want to keep plus $5,000 of costs, grossed up for 25% tax.
Why does fewer billable hours raise the rate so much?
Your costs and income target are fixed, so they are spread over fewer hours. The chart shows how the rate falls as billable hours rise.
Should I charge by the hour or by the project?
Use the hourly figure as a floor. Project pricing can earn more if you work faster than your estimate, but check that the project price still divides back to at least this rate.
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