How to use this calculator
Enter the pay you want before personal tax, plus annual business expenses. Deduct holidays and time off from working weeks. Count only hours you expect to invoice, excluding unpaid administration, sales, and training.
The formula
A worked example
A $60,000 annual pay target plus $12,000 expenses requires $72,000 revenue. At 48 weeks and 25 billable hours per week, there are 1,200 billable hours, so the baseline rate is $60 per hour.
Assumptions & limitations
A planning baseline, not a market-rate recommendation or take-home-pay estimate. Assumes all billable hours are sold and paid. Taxes, benefits, unpaid invoices, and profit reserves must be included in your own targets if relevant.
Common questions
Should I enter every hour I work?
No. Enter the hours you can actually bill. Unpaid work reduces billable capacity and raises the rate needed to meet the same target.
Is this my after-tax income?
No. The pay target is before personal taxes. This tool does not calculate tax obligations.
Supporting reference
The method above states this calculator’s assumptions. This reference provides related definitions and technical context.
Xero: pricing freelance services ↗Formula and worked example checked against automated test cases. About our methodology.