How it is calculated
Revenue = (Net ÷ (1 − tax%) + yearly costs) × (1 + buffer%) Billable hours = (52 − weeks off) × days/week × hours/day × billable% Hourly rate = Revenue ÷ Billable hoursWhy billable time? Freelancers are not paid for sales, email, invoicing and learning — usually a quarter to a half of their time. So revenue is divided only by the hours clients pay for.
The result is your minimum; raise it for experience, demand and the value you deliver.
Worked example
Take-home 4,500 a month, costs 450 a month, 20% tax, 10% buffer, 6 weeks off, 8 hours × 5 days, 65% billable: revenue needed 80,190 a year over 1,196 billable hours — about 67 per hour and 536 per day.
Frequently asked questions
Hourly or project pricing?
Project pricing usually works better when the scope is clear; use the hourly rate to estimate, then add a margin for risk.
Does the rate include VAT?
No — it is before sales tax. Add VAT on the invoice if you are registered.
What billable share is realistic?
50–75% for most freelancers, lower at the start when finding clients takes longer.