How Much Should I Charge Per Hour to Earn a Certain Monthly Income?

How to Calculate Your Ideal Hourly Rate (and Why It Matters)

If you’re freelancing, consulting, or running any kind of service-based business, figuring out what to charge per hour can feel a little overwhelming. A lot of people start by looking at what others are charging or picking a number that “feels fair,” but that doesn’t always line up with what you actually need to earn.

That’s where the Hourly Rate Calculator comes in. Instead of guessing, it helps you work backward from the kind of life you want to support. It takes into account your living expenses, how much you want to set aside for taxes and investments, and how much time you realistically have available to work. From there, you can figure out what you should be charging to make everything work.

Let’s take a closer look at the key questions the calculator asks, and why each one really matters when you’re setting your rate.

1. How Much Do You Want to Live on Each Month?

This is where everything starts. The calculator asks how much money you want (or need) to live on each month. That might include your rent or mortgage, groceries, gas, phone bill, insurance, streaming services, or anything else that keeps your life running. You don’t have to get overly detailed, but it helps to come up with a solid monthly target that actually reflects your lifestyle.

This number is important because it gives you a clear goal. Without it, you’re kind of floating when it comes to pricing. You might accidentally set your rate too low and end up scrambling to make ends meet, or you might assume you’re earning “enough” without realizing you’re falling short on things like savings or long-term stability.

When you start with your ideal monthly income, you’re setting the tone for a more intentional business. It shifts the question from “What can I get?” to “What do I need to bring in to live comfortably?” That’s a much more empowering place to start.

2. What’s Your Tax Rate?

Taxes are one of those things that sneak up on you if you’re not planning ahead. When you’re self-employed, no one’s withholding taxes from your paycheck, so it’s on you to set that money aside. That’s why the calculator asks you to enter a rough percentage for your total tax rate.

This percentage helps make sure you’re thinking about your take-home income the right way. You might be aiming to live on, say, $5,000 a month, but you’ll need to earn more than that to actually keep that amount after taxes. Planning for it upfront means you’re not surprised come tax season, and it helps you avoid the stress of trying to catch up later.

Even if you’re not 100% sure about the exact number, estimating based on past tax returns or using a ballpark range (like 25 to 30 percent) is usually a good place to start. The point is to build your rate with enough breathing room that your finances still work after the government takes its cut.

3. How Much Do You Want to Invest?

This one often gets overlooked, but it’s just as important as taxes. The calculator gives you a place to factor in what percentage of your income you want to set aside for things like retirement, savings, or future investments. It doesn’t have to be a huge number, but even a small amount each month can add up over time.

By including this in your rate, you’re treating your future like a real expense—which it is. It’s easy to say “I’ll save what’s left over,” but let’s be honest: when life gets busy or unexpected bills pop up, that extra money has a way of disappearing. Planning for it upfront makes sure it actually happens.

Whether you’re trying to build a cushion, put money into a retirement fund, or save up for bigger goals, your rate should support that. It’s not just about surviving month to month—it’s about giving yourself room to grow.

4. How Many Days Will You Work Each Year?

It’s tempting to start with the idea of a full 365 days, but that’s not how real life works. You need to think about weekends, holidays, sick days, family time, vacation, and just plain rest. The calculator asks how many days you plan to work in a year so that your rate reflects reality, not a fantasy schedule.

A lot of people don’t realize how much this affects your income goals. If you only take into account the money you want to earn, but not the time you have available to earn it, you might accidentally create a rate that only works if you’re working nonstop. And that’s not sustainable.

This is your chance to build some margin into your year. Be honest with yourself about how many days you’ll realistically work, and don’t forget to leave space for breaks. Your rate should support a balanced life, not burn you out.

5. How Many Hours Can You Bill Each Day?

This is another area where it’s easy to overestimate. Sure, you might work an 8-hour day, but how many of those hours are actually billable? Client work, meetings, emails, admin tasks, marketing—these all take time, and not all of it shows up on an invoice.

The calculator asks you to enter the number of hours you can reasonably expect to bill each day. That number might be four or five hours for some people, or a little more or less depending on your workflow. What matters is that you’re honest about how your time is really spent.

By factoring this in, you’re making space for all the non-billable work that keeps your business running. That way, you don’t end up undercharging simply because you didn’t realize how few hours each day are actually income-generating. Your rate should reflect the full picture of your workday, not just the client-facing parts.

Why This All Matters

Putting these pieces together gives you a much clearer picture of what you actually need to charge in order to live the way you want to live. It helps you base your pricing on your goals, your time, and your priorities—not someone else’s idea of what your rate “should” be.

There’s no magic number that works for everyone. What matters is building a rate that supports your version of success, whether that means working fewer hours, traveling more, saving for the future, or simply creating more stability.

When you understand where your rate comes from, it’s easier to communicate your value, feel confident in what you’re charging, and make choices that are in line with the life you’re building.