Business calculator

Hourly Rate Calculator for Freelancers and Business Owners

By Artur Neumann. Updated October 21, 2026.

I run my business in Germany. Monetary examples use euros unless another currency is stated.

What This Calculator Does

This calculator shows you the minimum hourly rate you need to ensure you reach your desired income after accounting for expenses. It factors in health insurance, retirement planning, and operating costs. It only calculates based on the hours you are actually paid by a client.

The result is your lower limit. If your current rate is below this, you are working for less than you want. If it’s above, you have room for savings and profit.

How Your Hourly Rate is Calculated

The calculation is done in four steps. We’ll use the calculator’s default values as an example.

Step 1: Calculate Monthly Expenses. You want to earn €5,000 per month, as if it were a salary. In addition, you have €600 for health and care insurance, €500 for your retirement planning, and €800 for operating costs (software, phone, insurance, and accountant). This totals €6,900 per month.

Step 2: Calculate Annual Expenses. €6,900 multiplied by 12 equals €82,800. This is the revenue you need to generate annually, excluding VAT.

Step 3: Count Working Days. There are 52 weeks in a year. With 5 working days per week, that’s 260 days. You need to subtract vacation days, holidays, and sick days. In this example, we’re subtracting 50 days. This leaves 210 working days. With 8 hours per day, that’s 1,680 working hours.

Step 4: Count Only Billable Hours. Not every hour you work is paid by a client. You spend time writing proposals, doing bookkeeping, answering inquiries, and learning new skills. In this example, 60% of your time is billable. That’s 1,008 hours per year.

Now, we divide: €82,800 divided by 1,008 hours equals €82.14 per hour. At 8 hours per day, your daily rate is €657.14.

The formula in one line:

Hourly Rate = (Desired Income + Insurance + Retirement + Operating Costs) × 12 ÷ Billable Hours

The Most Important Factor: Billable Time

No single value impacts your result as much as the percentage of time you can bill. The table above illustrates this. At 80%, you need an hourly rate of €61.61. At 40%, you need €123.21. Your expenses are the same in both cases. Only the number of paid hours changes.

Estimate this value honestly. Track how you spend your time for a week. Then, count how many hours you were able to invoice to a client. Especially when you’re starting out, acquiring clients takes a lot of time.

You have two levers here. You can increase your price, or you can reduce the amount of time you spend on non-billable activities. In my business, AI now handles much of the bookkeeping, recurring customer questions and marketing. See the article AI for Freelancers for how this works without a team.

Common Mistakes

You divide your desired income by the hours an employee works. An employee working 40 hours per week typically works around 173 hours per month. €5,000 divided by 173 hours is just under €29 per hour. With this rate, you’re missing out on insurance, retirement contributions, operating costs, and any non-billable hours. The calculator, for the same desired income, comes up with €82.14, almost three times as much.

You forget to factor in employer contributions. In this German example, the employer pays part of an employee’s health and pension insurance. As a freelancer, you pay everything yourself. That’s why the calculator has separate fields for insurance and retirement.

You calculate based on 365 days. Weekends, vacations, holidays, and sick days apply to you too. If you don’t account for them, you’re planning based on revenue you’ll never actually earn.

You confuse net and gross. The hourly rate from the calculator is net. If you charge VAT, it’s added on top and goes to the tax authorities.

You don’t plan for a buffer. The calculator shows the lower limit. Slow months, a client who pays late, or a new purchase aren’t included. Therefore, add a buffer for savings and profit.

The Hourly Rate is Your Lower Limit, Not Your Price

I eventually stopped exchanging time for money. Today, I would only sell an hourly rate if you were just starting out and needed to build up your portfolio. Hourly rates are rarely well-compensated. And your income has a hard limit, your day only has 24 hours.

It’s much easier to sell a package with a fixed result at a higher price. Your client knows what they’ll get and how much it will cost. And you benefit from becoming more efficient. The price for the package remains the same, but your earnings per hour increase with each template and each streamlined process. See the article Attract Clients as a Coach or Consultant for how to describe such a package.

Therefore, use the calculator for your packages. Estimate how many hours it will take you, and multiply that by your minimum hourly rate. That’s the price you should never go below. What you can charge above that depends on the value you provide to your client.

The most powerful leverage for this offering is identifying the right target audience. The same service is far more valuable to a client who is already successful than to someone just starting out. I explain why specialists command higher fees in the article Narrowing Down Your Target Audience.

What to Do with the Results Now

Compare the results with your current pricing. If your current price falls below the calculated value, you have three options. You can increase your price. You can reduce the time you spend on tasks that aren’t directly compensated. Or, you can offer a package instead of hourly rates. Often, a combination of all three approaches yields the best results.

If you’re considering raising your price, first assess how many clients you might lose as a result. Often, it’s more than you think. You can find the relevant calculations in the tools section below.