Business & Recruitment
Recommended for retirement security.
Target Hourly Rate
$116
To generate $121,500 revenue/yr
To earn a $100k equivalent salary, you need to bill 1049 hours at $116 per hour. This accounts for your overheads and time off.
Note: Rate is exclusive of GST. If your turnover exceeds $75k, you must add 10% GST to your invoices.
Determining a freelance hourly rate is one of the most challenging tasks for independent professionals, creatives, and contractors in the Australian market. Unlike a salaried employee, a freelancer is essentially a 'business of one.' This means your hourly rate must cover not only your 'take-home pay' but also all the costs and benefits that an employer would typically provide. In Australia, this includes the 11.5% Superannuation Guarantee, workers' compensation insurance, professional indemnity insurance, and 'hidden' costs like equipment, software subscriptions, and administrative time. Furthermore, freelancers don't get paid for annual leave, sick leave, or public holidays, so their active working hours must be high enough to fund their time off. Setting the right rate is a delicate balance. If you set it too low, you might find yourself earning less than the minimum wage once taxes and overheads are accounted for—a common trap for new freelancers. If you set it too high, you might price yourself out of a competitive market. The 'fair go' principle in Australia also applies to the gig economy, where contractors are increasingly expected to benchmark their rates against the 'Real Hourly Rate' of a permanent employee. Whether you are a web developer in Sydney, a copywriter in Melbourne, or a consultant in Perth, understanding the true cost of your time is the difference between running a sustainable business and suffering from financial burnout. This tool helps you bridge the gap between a 'dream salary' and the practical hourly rate you need to invoice your clients.
The formula for a freelance hourly rate begins with your 'Target Annual Salary'—the amount you would expect to earn as a permanent employee. To this, we add 'Direct Overheads' (insurances, software, hardware, home office costs) and the mandatory 'Superannuation Contribution' (11.5%). A critical part of the calculation is accounting for 'Non-Billable Time.' A full-time employee works about 260 days a year, but a freelancer must subtract 20 days for annual leave, 10 days for sick leave, and roughly 11 public holidays. This leaves approximately 219 possible working days. However, even in those 219 days, a freelancer cannot bill 100% of their time. Administrative tasks, marketing, invoicing, and professional development (known as 'Utilization') usually take up 30% to 50% of a freelancer's week. The formula used here is: (Target Salary + Overheads + Super) / (Potential Billable Hours). For example, if you want a $100k salary and have $10k in overheads, you need to earn $122,650 gross (including super). If you can only bill 1,000 hours a year (approx. 20 hours a week), your rate must be at least $122.65 per hour. This ensures that every billable hour is 'working hard' to cover your total lifestyle and business costs, providing a sustainable financial model that mirrors the security of a permanent role while enjoying the freedom of freelancing.
A common rule of thumb for Australian freelancers is to take the hourly rate of an equivalent salaried role and multiply it by three. One-third covers your take-home pay, one-third covers your business overheads and taxes, and the final third covers your 'downtime' (marketing, illness, and holidays). If your calculated rate is significantly lower than this 'triple' rate, you may be under-charging for the value you provide.
If you expect your freelance turnover to exceed $75,000 in a financial year, you MUST register for GST. This means you need to add 10% to your calculated hourly rate when invoicing clients. Remember, GST is money you are collecting for the ATO, not profit for you. Always keep your GST collections in a separate high-interest savings account so you aren't caught short at BAS time.
While an hourly rate is a great baseline, as you become more efficient, 'hourly' pricing can actually penalize you for being fast. Once you know your minimum hourly rate to survive, consider moving toward 'project-based' or 'value-based' pricing. If a project takes you 5 hours but provides $5,000 of value to the client, your 'effective' hourly rate becomes $1,000, which is the ultimate goal of a successful freelance career.
For one month, track every single minute you spend on your business—including the 'unpaid' stuff like email and social media. You will likely find that your 'utilization' is lower than you think. Use this data to adjust your hourly rate upward so that your billable hours accurately subsidize your non-billable administrative burden.
Professional Indemnity and Public Liability insurance are non-negotiable for most Australian contractors. Don't just take the first quote. Use a broker or a comparison site to find coverage that fits your specific niche. Saving $500 a year on insurance is an immediate $500 boost to your personal take-home pay.
Freelance income in Australia is often 'lumpy'—you might have $20k in invoices paid in June and nothing in July. When you calculate your rate, ensure it allows you to save at least 15% of every invoice into a 'buffer' account. This replaces the sick leave and stability that permanent employees take for granted.
Tom was a senior dev earning $150k. He thought a $100/hr freelance rate was 'huge.' After using the calculator, he realized that after 11.5% super, $15k in software/hardware, and a 60% utilization rate (accounting for sales), he was actually earning *less* than his previous job. He raised his rate to $165/hr and finally felt the financial benefit of going solo.
Aisha, a freelance illustrator, wanted a modest $60k income. She had low overheads ($3k) but only wanted to bill 15 hours a week to focus on personal projects. The calculator showed she needed to charge $85/hr. This clarity allowed her to say 'no' to low-paying $40/hr gigs that were draining her time without covering her basic needs.
A management consultant, Derek, billed $250/hr but forgot to account for his $30k in travel and office costs. He was shocked to find his net profit was much lower than expected. By refining his 'overheads' in the estimator, he realized he needed to charge travel as a separate line item, preserving his hourly rate for his actual expertise.
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