How Much Should I Charge Per Hour?

How to Figure Out Your Ideal Hourly Rate Based on Monthly Income

If you work for yourself, whether that’s freelancing, consulting, or running your own service-based business, deciding what to charge per hour can be one of the trickiest parts. It’s common to start by checking what others in your field are charging or going with a number that feels fair. But those approaches don’t always match your real-life needs.

That’s where a tool like the Hourly Rate Calculator can be a game-changer. Instead of guessing, you get to work from the ground up starting with the monthly income you want to bring in. The calculator also helps you think about taxes, investments, and how much time you actually have available to work. The end result is a more grounded, intentional hourly rate that fits your life.

Here’s a closer look at the main inputs the calculator uses and why each one matters.

1. Your Ideal Monthly Income

This is the foundation for everything else. The calculator asks how much money you’d like to have each month to support your lifestyle. That might include rent or mortgage, food, transportation, utilities, subscriptions, health insurance, and anything else that keeps your life going.

You don’t need to list out every penny, but it’s important to land on a number that reflects what you actually need. Think beyond just covering the basics. What does it take to live comfortably and feel secure? That number sets the tone for the rest of your calculations.

Starting here shifts the focus away from what others are charging and centers it on what you need. It also helps bring clarity to your goals, giving you a specific target to work toward instead of a vague sense of what might be enough.

2. The Tax Rate You Expect to Pay

When you’re self-employed, no one’s taking taxes out of your checks; you’re in charge of setting that money aside. That’s why the calculator asks for a rough percentage for taxes.

This piece helps ensure your income goals take the full picture into account. If you want to keep, for example, $4,000 a month after taxes, you’ll need to earn more than that upfront. Planning for taxes now can save you from a major headache when quarterly payments or tax season rolls around.

If you’re not sure what number to use, you can estimate based on your past returns or start with a range like 25 to 30 percent. The goal is to make sure your hourly rate supports your actual financial reality, not just the amount you’d like to take home.

3. How Much You Want to Invest

This part is easy to skip, especially when you’re focused on getting the bills paid. But saving for the future is a huge part of building a sustainable business and life. The calculator asks you to include a percentage of your income you’d like to put toward savings, retirement, or other long-term goals.

Treating this as a real expense builds that habit into your rate from the start. It’s easy to tell yourself you’ll save “whatever’s left” at the end of the month, but that often doesn’t happen. Life throws curveballs, and money can disappear quickly when it’s not spoken for.

By accounting for investments in your rate, you give yourself a better shot at long-term stability. Whether it’s a retirement fund, an emergency cushion, or a future business investment, those goals deserve space in your pricing.

4. How Many Days You’ll Work Each Year

It might be tempting to imagine working year-round, but that’s not how most people operate. You’ll want to consider weekends, holidays, vacations, family time, and unexpected days off.

The calculator asks for how many days you plan to work each year so that your rate stays realistic. If you base your income on the assumption that you’ll be working 365 days, your rate might seem fine on paper. But in practice, it can set you up for burnout or disappointment.

Be honest with yourself. Maybe you plan to take two weeks off for vacation, plus holidays, and a few sick days. Factor those in. Your rate should reflect the time you actually have available, not a perfect-world schedule.

 

5. The Number of Hours You Can Bill Each Day

Just because you work an 8-hour day doesn’t mean all 8 hours are billable. There’s client communication, admin work, content creation, marketing, and countless other tasks that don’t show up on an invoice.

The calculator asks how many hours per day you can realistically bill for. For some people, that might be four or five hours. Others might squeeze in a bit more, depending on how they structure their day. The key is being honest about how your time is actually spent.

By thinking this through, you avoid setting a rate that assumes every minute is client work. It gives your pricing enough breathing room to handle all the behind-the-scenes work that goes into running a business.

Why This Approach Makes a Difference

When you take all of these factors into account — monthly income, taxes, investments, workdays, and billable hours — you end up with an hourly rate that’s built around your real life. It’s not just a number pulled from a forum or copied from someone else’s website. It’s your rate, based on your needs and goals.

This kind of clarity makes it easier to stand behind your pricing, talk about it with confidence, and stay consistent in your business decisions. It helps you feel less scattered and more grounded in the financial side of your work.

There’s no one-size-fits-all number here. But there is a process that can help you land on a rate that feels right and one that actually works for the kind of life you’re trying to build.