How the number is worked out
The calculator starts with the income you want to take home after tax and grosses it up using the tax rate you enter. Your business costs are added on top, because they are paid out of revenue before tax is calculated. That total is the revenue you need each year.
It then counts your real working time: 52 weeks minus the weeks you take off, multiplied by the hours you can bill each week. Dividing the revenue you need by those billable hours gives the hourly rate.
Why billable hours matter more than working hours
Most freelancers work more hours than they invoice. Finding clients, sending quotes, doing bookkeeping and answering email all take time that nobody pays for. If you work 40 hours a week but bill 25, your rate has to cover all 40. That is why the input asks for billable hours only. If you are unsure, start with 20 to 25 and adjust after tracking your time for a month.
What this calculator leaves out
The tax rate is a single flat estimate. Real tax depends on your country, your income level, and what you can deduct, so treat the result as a starting point and check it with an accountant. The calculator also assumes you have no unpaid late invoices and no retirement savings target beyond your take-home figure. If you want to save for a pension, add that amount to the take-home income.
Your software costs count too. Invoicing, CRM and automation tools can add a few hundred dollars a year, which is why the software cost calculator and the comparisons on this site exist. For a deeper look at the method, read how to set your freelance hourly rate.
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