In this article
A freelance rate has to pay for much more than your time. It covers your take-home income, your business costs, your tax, and the many hours you spend finding clients, sending invoices and waiting for payments, which no one pays you for. Start from what you need, not from what you think the market will pay, and the right number follows.
The formula, step by step
- 1Add expenses to the goal₹12,00,000 + ₹1,20,000 = **₹13,20,000** needed after tax.
- 2Gross it up for tax₹13,20,000 ÷ (1 − 0.15) = **₹15,52,941** to bill.
- 3Count the billable hours25 hours × (52 − 6) weeks = **1,150** hours a year.
- 4Divide₹15,52,941 ÷ 1,150 = **₹1,350** an hour.
The tool also shows the day rate (8 hours), the yearly billing needed (₹15,52,941), the billable hours per year (1,150) and the monthly billing (₹1,29,412).
Why billable hours are not working hours
A freelancer spends time on sales, emails, accounting, learning, revisions and unpaid calls. Out of a 40-hour week, only 20 to 30 hours can usually be billed to clients. Using 40 hours in the calculation gives a rate that looks competitive but leaves you short every month.
| Billable hours per week | Billable hours per year | Hourly rate needed |
|---|---|---|
| 15 | 690 | ₹2,251 |
| 20 | 920 | ₹1,688 |
| 25 | 1,150 | ₹1,350 |
| 30 | 1,380 | ₹1,125 |
| 35 | 1,610 | ₹965 |
Same goal, expenses, tax and 6 weeks off. Dropping from 35 billable hours to 15 more than doubles the hourly rate you need.
The rate falls as you bill more hours, but only if the work is steady. A lower rate with unfilled weeks is the worst of both.
Time off is part of the price
An employee gets paid holidays and sick leave. A freelancer pays for them through the rate. Every week off is a week with no income, so it must be recovered in the other weeks.
| Weeks off per year | Billable hours per year | Hourly rate needed |
|---|---|---|
| 2 | 1,250 | ₹1,242 |
| 4 | 1,200 | ₹1,294 |
| 6 | 1,150 | ₹1,350 |
| 8 | 1,100 | ₹1,412 |
| 10 | 1,050 | ₹1,479 |
All rows assume 25 billable hours a week. Each extra week off adds about ₹30 to the hourly rate here.
The target income changes the rate
| Take-home goal | Hourly rate | Day rate (8 hours) |
|---|---|---|
| ₹6,00,000 | ₹737 | ₹5,893 |
| ₹9,00,000 | ₹1,043 | ₹8,348 |
| ₹12,00,000 | ₹1,350 | ₹10,803 |
| ₹18,00,000 | ₹1,964 | ₹15,714 |
| ₹24,00,000 | ₹2,578 | ₹20,624 |
Same expenses, 15% tax, 25 billable hours and 6 weeks off. Doubling the goal does not exactly double the rate because the expenses stay fixed.
A rate that looks high next to a salary-equivalent hourly figure is normal. It covers tax, equipment, software, idle time and the risk that work dries up.
A note on how tax is handled
The tool adds your expenses to your goal and then grosses up the whole amount for tax. In real accounts, tax is paid on profit, which is income minus expenses, so the exact figure is slightly lower. On these numbers the difference is about ₹21,176 a year. The tool's answer is a cautious one. Treat it as a floor, then check with an accountant, especially if you may pay GST or advance tax.
Project price against hourly price
- Fair when scope is unclear
- Client sees the time cost
- Faster work earns less
- Rewards speed and skill
- Needs a clear scope
- Add 15% to 25% for revisions
Use your hourly rate to estimate the hours, then price the project. A fixed price should never come out lower than the hourly figure for the same work.
Setting your rate: a checklist
- Decide the take-home income you need, after tax and after business costs.
- List yearly expenses: software, equipment, internet, coworking, insurance, accounting.
- Choose a realistic number of billable hours, usually 20 to 30 a week.
- Set weeks off honestly, including holidays, illness and slow periods.
- Calculate, then round up to a clean number, and revisit it once a year.
Questions people ask
How do I calculate my freelance hourly rate?
Add your yearly expenses to the take-home income you want, divide by one minus your tax rate, then divide by the billable hours you expect in a year (billable hours a week times weeks worked).
How many billable hours should I assume?
Most freelancers can bill 20 to 30 hours a week. The rest goes to finding clients, admin, learning and unpaid revisions. Using 40 hours leads to a rate that is too low.
Why is a freelance rate higher than an employee's hourly pay?
It must cover tax, equipment, software, unpaid time between projects, holidays and the risk of gaps between clients. An employee's employer bears many of these costs.
What is a day rate?
A day rate is the hourly rate times the number of hours in a working day. The tool uses 8 hours. Many freelancers quote day rates for consulting and long projects.
Does the calculator include GST?
No. GST is collected from the client on top of your rate and passed to the government, so it is not part of your income. Add it as a separate line on your invoice.
Should I charge by the hour or by the project?
Use the hourly rate to estimate time, then choose. Hourly billing suits unclear scope. A fixed project price suits clear work, and should be at least the hourly figure. The Freelance Rate Calculator gives the hourly floor.