Find the minimum hourly rate you need to reach the income you want. It starts from your take-home goal and adds taxes, business costs, a safety buffer, and only the hours you actually bill.
Most freelancers set their rate by copying the hourly wage from their old job, and that's exactly why they fall short. On your own you pay your own taxes and contributions, cover your business costs, and only bill a fraction of the hours you work — the rest goes to sales, proposals, and admin. This calculator works backwards, from the income you want to keep, to give you the hourly rate that actually sustains it. Treat it as a starting point: your final price also depends on the value you deliver and your market.
Financial disclaimerIndicative result — not professional financial advice. Consult a specialist before making investment or credit decisions.
The hourly rate you must charge to reach your take-home income goal, how much you need to invoice per month and per year to get there, how many billable hours that assumes, and how much of those billings goes to taxes and contributions. It also breaks each year of billings into your take-home, your buffer, business costs, and taxes, so you see where every unit you charge really goes.
Who it's for
For freelancers, consultants, and independent professionals just starting out who need to set a price for the first time, and for those already billing who suspect they charge below what they need. Also for anyone moving from employment to self-employment who wants to know what rate matches their current salary once they take on taxes, costs, and gaps without work.
When to use it
When setting your rate for the first time, so you don't anchor to an employee's hourly wage. Before sending a proposal, so you never quote below your floor. When considering a price increase, to see how much you actually need. And when deciding whether a fixed-price project is worth it: divide the project price by your estimated hours and compare it to your minimum hourly rate.
When NOT to use it
Don't use it as your only pricing reference: it gives the floor to avoid losing money, but the ceiling is set by the value you deliver and what your market pays. Don't use it to compute exact taxes — you set the percentage and the rules change by country and regime; confirm with your accountant. And don't use it for product or volume pricing: there unit margin rules, not an hourly rate.
What data it needs
Desired annual take-home income
What you want left over in a year, after taxes and your business costs. It's your pocket goal — the starting point of the whole calculation.
Annual business costs
Everything you pay to be able to work: software, gear, office, internet, insurance, accountant, training. Don't include taxes here; they have their own field.
Taxes & contributions (%)
The share of your billings taken by income tax and self-employment or social-security contributions. It's illustrative and depends on your country and regime.
Safety buffer (%)
Extra margin on your goal for slow months, late invoices, and surprises. 10–20% keeps one bad quarter from dropping you below what you need.
Weeks worked per year
52 minus your vacation, holidays, and non-billing weeks. 44 to 48 is normal for full time; adjust it to your reality.
Billable hours per week
Only the hours you charge a client. Admin, sales, and learning aren't billable, so full time is usually 20–30, not 40.
Formula
Gross billings = (Take-home × (1 + buffer %) + business costs) / (1 − taxes %). Billable hours per year = weeks × hours per week. Hourly rate = Gross billings / Billable hours per year. Example: take-home 30,000, costs 6,000, taxes 25%, buffer 10%, 46 weeks × 25 hours → billings 52,000, 1,150 hours, and a rate of 45.22 per hour. Taxes are computed on gross billings, not on your take-home goal — that's why you divide.
How to interpret the result
The hourly rate is your floor: below that number you won't reach the income you want once taxes and costs are paid. If it looks high, compare it to your target annual billings and you'll see it's consistent with what you need, not arbitrary. To lower it the healthy way you have two real levers: bill more hours (raise your billable hours) or cut your fixed costs; dropping the rate without touching those two just means working the same and earning less.
How this calculator was reviewed
What you'll see, what it prevents, and where you shouldn't trust it
Every flagship calculator ships with the same editorial structure: two hypothetical worked examples with numbers, the errors it helps you avoid, the model's declared limitations, and a visible financial disclaimer. The review is signed and dated.
Hypothetical case·Case A
A designer moves from employee to freelancer and works out her real rate
She earned 30,000 a year take-home as an employee and plans to charge the same per hour: about 15 (30,000 over 2,000 hours). Done right, she starts from 30,000 take-home, adds a 10% buffer (3,000) and 6,000 of business costs: 39,000 before tax. With taxes and contributions at 25%, she needs to bill 39,000 / 0.75 = 52,000 a year. Since she only bills 25 hours a week over 46 weeks (1,150 hours), her real rate is 52,000 / 1,150 = 45.22 per hour — three times what she was about to charge. At 15 she'd have worked the same to earn far less.
Illustrative figures. This example does not represent a real company or a financial recommendation.
Hypothetical case·Case B
A developer decides whether a fixed-price project is worth it
His minimum hourly rate is 50. A client offers 4,000 for a project he estimates at 70 hours. At 50 an hour his floor for those 70 hours is 3,500, so 4,000 leaves margin… if he's right about the hours. He adds a 20% risk buffer: 70 × 50 × 1.2 = 4,200. Since the client offers 4,000, below his buffered price, he negotiates scope or price. If instead the project ran to 90 hours, his effective rate would fall to 44 an hour, below his floor. The hourly rate is the yardstick for any fixed price.
Illustrative figures. This example does not represent a real company or a financial recommendation.
Common mistakes it helps you avoid
Things a team or decision-maker might assume that this calculator forces you to verify before closing the math.
Charging the hourly wage from your old job. That number doesn't include your self-employment taxes, your business costs, or the hours you don't bill: as a freelancer it leaves you well short.
Assuming all your hours are billable. If you calculate on 40 hours a week but only charge 25, your real rate falls short by nearly half.
Forgetting self-employment or social-security contributions on top of income tax. They're two separate costs and together they can take a third of your billings.
Leaving out a buffer. With no margin for slow months and late invoices, a single bad quarter drops you below the income you needed.
Model limitations
What the calculator does not do, and where you need a professional or a specialized tool.
It doesn't compute taxes by jurisdiction: you set the percentage. Rules and brackets change by country, regime, and income level, so confirm it with your accountant.
It assumes constant billable hours. In practice they fluctuate by season, vacation, and gaps between projects; use a realistic average, not your best week.
It doesn't know the value you deliver or your niche's market price. It gives the floor to avoid losing money, not the ceiling your positioning allows.
It spreads billings evenly across 12 months. Your real income will be uneven; the buffer exists precisely to absorb that swing.
When NOT to use this calculator
Don't use this calculator as your only pricing reference: it gives the minimum rate to avoid losing money, but how much more you can charge depends on the value you deliver and what your market pays. Don't use it to estimate your tax bill — the percentage is an input you provide and rules vary by country and regime; validate it with your accountant. And don't apply it to product, volume, or subscription pricing: there the right call looks at unit margin and customer lifetime value, not an hourly rate.
Financial, tax, accounting and legal notice
The result is an informative estimate based on the data you enter. It does not constitute financial, tax, accounting, or legal advice. For decisions that affect taxes, financing, or wealth, validate the numbers with a certified professional in your jurisdiction.
Editorial review
Reviewed by the Simúlalo editorial team
This simulator was reviewed by the people listed below before being published. The review covers the declared formula, the model's assumptions, the explicit limitations, and the absence of unsupported financial claims.
They are part of the Simúlalo editorial team, focused on building financial tools that are clear, educational, and easy to interpret.
Last updated: ·We update this page when the methodology, sources used, or simulator structure change.
This tool uses standard financial formulas and user-supplied data. To explain concepts like rates, credit, risk, or cash flow we consult public and official sources (Banxico, SAT, CONDUSEF, CNBV, Banco de España, IFRS, BIS, among others). Simúlalo is not affiliated with, sponsored by, or endorsed by these institutions.
Frequently asked questions — Freelance rate
1How do I calculate my freelance hourly rate?
Start from the take-home income you want per year, add a buffer for surprises and your fixed business costs, and divide that total by (1 − your tax percentage) to get the gross billings you need. Then divide by your real billable hours for the year (weeks worked × hours you actually charge). The result is your minimum hourly rate. Don't start from a job's hourly wage: that number doesn't include your taxes, your costs, or the hours you don't bill.
2How many billable hours does a freelancer have per year?
Far fewer than it seems. Even working 40 hours a week, you only bill a portion: the rest goes to finding clients, writing proposals, admin, and learning. Full time, billing 20–30 hours a week is realistic. With 25 billable hours over 46 weeks worked that's about 1,150 hours a year, not the 2,000 of an employee. That gap is the main reason a freelancer must charge more per hour.
3Why should my freelance rate be higher than an hourly wage?
Because it covers things an employer pays for in a job. You take on your own taxes and contributions, your business costs (software, gear, insurance), your unpaid vacation and sick days, and you only bill a fraction of your hours. If an employee earns 20 an hour, their real cost to the company is much higher; as a freelancer you carry that overhead. That's why a rate that looks like double an hourly wage often just leaves you an equivalent income.
4What percentage should I set aside for taxes as a freelancer?
It depends on your country, your income level, and your tax regime, so your accountant confirms the exact figure. As a rough reference, many freelancers set aside 20% to 35% of their billings to cover income tax plus social-security or self-employment contributions. In this calculator that percentage is a field you set: tune it to your real situation and don't confuse it with the final rate.
5How much should I charge per project instead of per hour?
Honestly estimate the hours the project will take, multiply them by your minimum hourly rate, and add a risk margin (15–25%) for surprises and scope changes. Charging per project rewards your efficiency — finish early and your effective hourly rate rises — but it shifts the risk of overruns to you, so the buffer is key. Use your hourly rate as a floor so you don't accept projects that, divided by the real hours, leave you below it.
6How do I raise my rate without losing clients?
Raise new clients first: quote the new rate from your next proposal and let the market validate it before touching existing ones. Give current clients notice, lean on concrete results you've delivered, and phase the increase if needed. Losing a low-rate client when you raise prices often improves your total income, because it frees hours for better-paid work. The calculator gives you the number you need to defend.
How much should I charge per hour as a freelancer to reach the income I want?
Work out the minimum hourly rate you must charge to reach the income you want, after taxes, business costs, and the hours you don't bill.
Results
Hourly rate
MXN 45
Target monthly billings
MXN 4,333
Target annual billings
MXN 52,000
Billable hours per year
1,150
Taxes & contributions (year)
MXN 13,000
What that rate really means
Of the MXN 52,000 you need to invoice per year, MXN 13,000 goes to taxes and contributions, MXN 6,000 to business costs, and MXN 3,000 to your buffer. You keep MXN 30,000 take-home: 58% of everything you invoice. That's why your hourly rate can't equal your hourly wage as an employee.