Most freelancers pick a rate by guessing, then wonder why they're broke despite staying busy. The actual math is simple, most people just never do it.
The most common approach is "a $75k/year employee makes about $36/hr, so I'll charge $40." This undercharges dramatically, because it ignores three things an employer normally absorbs for you: self-employment tax, business expenses, and, the big one, the fact that you can't actually bill 40 hours a week.
A full-time employee is paid for roughly 2,080 hours a year (40 hrs × 52 weeks), and their employer eats the cost of meetings, admin, sales, and slow weeks. A freelancer bills only the hours actually spent on paid client work, after subtracting time spent on invoicing, finding clients, admin, and the inevitable slow stretches, most freelancers land somewhere between 20 and 30 truly billable hours a week, not 40.
Work backward from the income you want:
(1 − your tax rate) to find the revenue you need to bill before tax.That result is your break-even hourly rate, not a rate to be proud of, just the number below which you're actively losing ground on your goal.
Plug in your own income goal, expenses, and realistic billable hours in the Ledgerline rate calculator, it does this math live as you adjust the inputs.
Calculate my rate →The formula gives you a floor, not a strategy. From there, adjust up for specialized skill, high demand, or scarcity in your niche, and adjust for what your specific market will actually bear. A calculated rate that's wildly out of line with what similar freelancers charge in your space is a signal to research further, not necessarily to accept the number blindly.