19 July 2026

How to calculate your freelance rate (the actual formula)

The short answer

Your minimum freelance hourly rate = (target annual income + business expenses + taxes) ÷ realistic billable hours per year. Most freelancers bill only 50–60% of working hours, so 1,000–1,200 billable hours a year is realistic — not 2,000. Example: to take home ₹12,00,000 with ₹2,00,000 expenses and ~25% tax on roughly 1,100 billable hours, you need about ₹1,700/hour — before profit margin.

Why hourly math fools people

Dividing your target salary by 2,000 hours assumes every working hour is billable. It never is: proposals, admin, marketing, and gaps between projects consume 40–50% of your time. Rates built on fantasy hours guarantee underpricing.

The formula, step by step

Target take-home income for the year.
Add business expenses: tools, hardware, insurance, subscriptions.
Add taxes on top (in India, plan for GST registration past the threshold plus income tax).
Divide by realistic billable hours (structured weeks: 1,000–1,200/year).
Add 10–20% buffer for dry months and scope overruns.

From hourly to day and project rates

Day rate ≈ 7 × hourly with a slight discount for guaranteed volume; project rate = estimated hours × hourly × 1.2 contingency. Quote projects whenever you can — clients buy outcomes, not hours.

Do the math with your own numbers

Rate Radar runs this exact formula in your browser and shows every step, so you can defend the number in a client call. Pair it with Charge More for the scripts that get the rate accepted.