What hourly rate should I charge as an entrepreneur?

The hourly rate must cover your target salary, payroll overheads (~25%), business costs and a profit margin. With a $3,500 salary target and 100 billable hours, the rate is typically $50–70 + VAT.

Why is the hourly rate higher than an hourly wage?

An entrepreneur pays their own pension, insurance, holidays, sick days, tools and administration. On top of that, only part of working time is billable. That is why the hourly rate has to be a multiple of an employee's wage.

How much of working time is billable?

Typically 50–70%. The rest goes to sales, quotes, bookkeeping, training and breaks. The calculator accounts for this through the number of billable hours.

Should VAT be added to the hourly rate?

Yes, if you are liable for VAT (turnover over $20,000). The standard VAT rate is 25.5%. A business customer deducts the VAT, but for a consumer customer it is a real cost.

Hourly Rate Calculator for Freelancers 2026

Name: Hourly Rate Calculator for Freelancers 2026
Author: Miikka

Calculate the hourly rate you should charge as a freelancer to cover costs and salary goal. Free rate calculator.

By Miikka · CalcBrew · Updated Sep 16, 2026

Target salary per month: $3,500

Billable hours per month: 100 h

Monthly expenses (insurance, software, etc.): $500

Desired margin: 15 %

$56/h

Hourly rate to charge

Salary incl. overheads (+25%)	$4,375
Hourly rate excl. VAT	$56/h
Hourly rate incl. VAT (25.5%)	$70/h
Monthly billing (excl. VAT)	$5,606

ℹ️ Overheads (pension, insurance, vacation, sick days) add about 25–30% on top of salary for a freelancer. Billable hours are rarely more than 60% of working time — the rest goes to sales, admin and breaks. Add sales tax or VAT to the client price where applicable.

This hourly rate calculator helps entrepreneurs and freelancers work out what to charge per hour so that costs, salary goals and margin are all covered. It accounts for overhead and VAT, so the price is realistic rather than too low.

How the calculator works and what it’s for▾

How the hourly rate is built

The calculator adds overhead and monthly costs to your salary target, applies the margin you want and divides the total by your billable hours. Finally it adds VAT for the customer price.

You get the rate without VAT, the rate including 25.5 percent VAT and the total monthly billing separately.

What you enter

You give your monthly salary target, how many hours per month you actually invoice, fixed monthly costs such as insurance and software, and the margin you want as a percentage.

In the results your salary is shown with overhead included, calculated as roughly a 25 percent addition to the salary.

Why overhead and a cap on billable hours matter

Overhead such as pension, insurance, holidays and sick days runs at about 25 to 30 percent of salary for an entrepreneur, so it has to be built into the price.

Billable hours are rarely more than 60 percent of working time, because the rest goes to sales, admin and breaks. If you price every working hour as billable, your rate ends up too low.

Common pricing mistakes

The most common mistake is forgetting that not all working time is billable. Another is leaving VAT out of the customer price, where it then eats into the margin.

Review your rate regularly as costs or goals change.

🔄 Reviewed June 2026

Frequently asked questions

Cite this calculator

APACalcBrew. (2026). Hourly Rate Calculator for Freelancers 2026. https://calcbrew.com/hourly-rate-calculator

MLA“Hourly Rate Calculator for Freelancers 2026.” CalcBrew, 2026, calcbrew.com/hourly-rate-calculator.

Link to https://calcbrew.com/hourly-rate-calculator. Results are estimates; cite the underlying formula or data source for academic work.

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