1. Set an Income Goal
Choose the annual amount you need before deciding whether the rate is sustainable.
Self-employed pricing
Self Employed Hourly Rate Calculator
Price your self-employed hourly rate after taxes, insurance, business expenses, non-billable admin time, slow periods, and your target annual income.
Self-Employed Hourly Rate Formula
Planning formula
Self-employed hourly rate = target annual income plus expenses plus tax reserve plus risk buffer, divided by annual billable hours.
Self-employed work can feel profitable at the invoice level but weak after unpaid time, tools, marketing, insurance, taxes, and inconsistent demand are included.
How This Self-Employed Hourly Rate Calculator Works
This page is for people pricing self-employed work, not comparing a full W2 job against a 1099 offer. The calculator starts with the income you want to earn, adds business expenses and tax reserve assumptions, then divides the total by realistic billable hours.
The most common mistake is counting every working hour as billable. Proposals, sales calls, client messages, bookkeeping, training, marketing, and gaps between projects reduce the number of paid hours that support your income.
2. Add Business Costs
Include software, equipment, insurance, workspace, accounting, legal, payment fees, and other operating costs.
3. Divide by Billable Hours
Use realistic client-billable hours, not total hours worked or a generic 2,080-hour year.
Inputs to Estimate
Income Goal
Define the annual amount the business needs to support you.
Expenses
Include recurring software, equipment, services, workspace, and insurance.
Taxes
Reserve cash for self-employment and income tax obligations.
Unpaid Time
Account for admin, marketing, calls, proposals, and learning.
Risk Buffer
Add margin for slow months, late payments, and unexpected costs.
This page is for rough planning only and is not tax, legal, financial, accounting, or employment advice.
Example: Pricing a Self-Employed Hourly Rate
If your target income is $100,000, annual business expenses are $15,000, and you want a $20,000 tax and risk buffer, the business needs to support about $135,000 before owner draw. If you expect 1,500 billable hours, the planning rate is about $90/hr before any additional margin.
Use the 1099 hourly rate calculator if you are specifically converting a W2 salary into a contractor rate. Use this page when the question is how to price self-employed work from scratch.
FAQ
Should my self-employed rate include taxes?
Yes, rate planning should account for tax reserves, although actual tax liability depends on your full situation.
Is self-employed hourly rate the same as take-home pay?
No. The hourly rate is what you charge. Take-home pay is what may remain after expenses, taxes, insurance, and reserves.
How many billable hours should I use?
Use realistic paid client hours after subtracting admin, sales, training, holidays, sick days, and slow periods. Many self-employed workers bill far fewer than 2,080 hours per year.
Calculate those hours from a full-year schedule with the freelancer capacity planner.