How to Calculate Your Hourly Rate: Formula and Example
The basic formula is simple: hourly rate = revenue needed per year ÷ billable hours. The hard part is getting both numbers right.
1. The revenue you need
Start with what you want to live on and add everything that is paid before that:
- Desired net income × 12
- + pension savings and a buffer for slow months
- + health insurance and social contributions
- + income tax
- = profit before tax
- + business expenses = revenue needed
2. Billable hours
From 52 weeks, subtract holidays, public holidays, sick days and training. Only part of the remaining time is paid by clients – the rest is sales, quotes, bookkeeping and waiting. More: How many hours can a freelancer bill?
Example with the calculator’s default values
| Revenue (excl. VAT) | €65,911 |
| − Business expenses | €4,800 |
| = Profit | €61,111 |
| − Social contributions | €12,222 |
| − Income tax | €9,778 |
| − Pension savings | €3,000 |
| − Risk buffer | €6,111 |
| = Net income | €30,000 (€2,500/month) |
So a desired net income of €2,500 per month means an hourly rate of about €59.22. Simply dividing the monthly salary by 160 hours would give far less – and you would be working at a loss.
General information, not tax or legal advice. For your situation, ask an accountant or your tax office. Last updated: November 2026