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How to Calculate Hourly Rate

Struggling with how to calculate your hourly rate? Harvest provides intuitive tools to convert salaries, calculate hourly wages, and manage billable hours efficiently.

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What should you charge per hour?

Most freelancers and consultants dramatically undercharge. This calculator accounts for what most people miss: non-billable time, taxes, and overhead.

$
Accounting for vacation, holidays, sick days
60%
Most freelancers can bill 50-70% of their time. The rest goes to admin, marketing, proposals, and learning.
$
Software, insurance, equipment, accounting, taxes beyond income tax, etc.
Your break-even rate $0
Recommended rate (+20% buffer) $0
Billable hours per week 0h
Equivalent daily rate $0

Start tracking your billable hours

How this hourly rate calculator works

It works back from the income you need to the rate you must bill, accounting for the hours you can't bill.

  • Billable hours/year = working weeks × hours per week × billable %.
  • Break-even rate = (target income + business expenses) ÷ billable hours.
  • Recommended rate = break-even plus a 20% buffer for taxes, slow periods, and profit.

Raising your billable percentage or trimming expenses lowers the rate you need.

Hourly Rate Calculation with Harvest

See how Harvest helps calculate and manage your hourly rates with ease. Perfect for freelancers and salaried employees alike.

Screenshot of Harvest showing hourly rate calculation interface.

How to Calculate Hourly Rate FAQs

  • To calculate your hourly wage from an annual salary, divide your salary by the total annual working hours. Typically, a full-time schedule is 2,080 hours per year (40 hours/week × 52 weeks/year). For example, a $50,000 salary equates to an hourly rate of about $24.04.

  • Freelancers should consider business expenses, taxes, and non-billable hours when setting hourly rates. A common guide is to add 50-75% to cover additional costs and account for time not directly billable to clients.

  • Benefits and taxes can significantly impact your take-home pay. Employers often cover benefits, while freelancers must account for these in their rates. Consider adding about 30% to your rate for self-employment taxes and benefit equivalents.

  • Harvest assists freelancers by enabling the differentiation between billable and non-billable hours, allowing precise rate calculations. It supports setting specific rates for various projects and tracking all hours worked.

  • To convert a monthly salary to an hourly wage, multiply the monthly salary by 12 to get the annual salary, then divide by 2,080 hours (if full-time). For instance, a $6,500 monthly salary is approximately $37.50 per hour.

  • It's advisable to review your hourly rate annually or when significant changes occur in the market, your skills, or your business expenses. Regular adjustments help maintain competitiveness and financial health.

  • Yes, Harvest integrates with financial tools like QuickBooks and Xero, helping streamline billing and rate management. This ensures seamless financial tracking and accurate invoicing.