Try Hubstaff for 14 days
No credit card required
No matter why you need it, this handy hourly rate calculator is a quick and easy way to get the insights you need.
Freelancers, hiring managers, employees, and entrepreneurs all need to make informed decisions about hourly rates. For instance, if you’re offered a salaried position, an hourly paycheck calculator can tell you your monthly take-home pay so you know you can pay your bills.
Jump right in and use this free tool to convert from salary to hourly, estimate an annual salary, or figure out what your freelance rate needs to be to meet your financial goals.
To get started, input your numbers into the corresponding field of the hourly wage calculator. You'll get a salary calculation right away.
For more useful tips, keep reading. Feel free to jump ahead to the section that you need the most.
When you look at pay rates for different kinds of jobs, you might see them in a lot of different forms. Pay rates are commonly given in these ways:
To convert between different rates, use this chart to help. It shows you how many hours, days, or weeks you work in a specific time period.
You can see that in a year, you work 2,080 hours. To calculate an hourly rate based on an annual salary, divide the salary by 2,080 to get the wage per hour.
You can also do calculations the other way around. Let’s say you know the hourly wage and you want to figure out how much pay to expect in a month. There are an average of 160 hours in a month, so multiplying the hourly amount by 160 will give you an expected monthly gross pay.
These figures are averages based on a typical 40-hour workweek, and they don’t take into account state and local taxes or other withholdings.
Also, these numbers do not take into account vacation time or sick time. Unpaid time off can affect your rate calculations, especially if you're using this chart to help you set rates for contract work.
We're not here to give you tax advice, but keep in mind that self employed freelancers and consultants must pay their own federal taxes, medicare taxes, and other expenses under the Federal Insurance Contributions Act (FICA). If you're based in the US, check out this freelancer's guide to income taxes.
If you’re looking for more information on how to set hourly rates as a freelancer, skip ahead to the section on determining hourly rates for freelancers.
For hiring managers, it can be tricky to set an hourly wage for a job. You want to attract the right talent, but overpaying could mean that you have to sacrifice something else that won’t fit in the budget.
Pay rates for an open position should take into account your budget for that position, the rates that other companies pay for that position, and perhaps the value of this hire for your company.
Most companies choose to set a pay range for an open position to allow some flexibility in the hiring process. A more experienced and skilled candidate has more opportunities, and they are more likely to create value for your company quickly. It makes sense to offer them a higher rate than you would offer to someone with less experience.
Determine the range that you can afford to pay for this position.
You might be able to find annual salary information in job descriptions, but that information isn’t always readily available.
Websites like Glassdoor can help you get recent information about hiring trends and expected pay rates. If salary information is hard to come by, consider talking to a recruiter who specializes in your industry.
This is the bottom of your salary range.
This number is the top end of your salary range.
A big mismatch between your budget and the industry average salary for this position might tell you that it’s not the right time to hire, or that you have underestimated the value of this skill. You can request an increase in your budget for this position, or you might be able to meet your needs by working with contractors and freelancers on a part-time basis.
Next, let’s answer another common pay question. Which is better: an hourly rate or a monthly salary?
Getting paid by the hour means that each paycheck is calculated based on the actual hours worked during that pay period. Most of the time, this means that the hourly team member has to track their time somehow, either with time tracking software or by filling out timesheets each week.
Hourly pay is standard for jobs with rotating schedules and in industries where the amount of hours worked every pay period might change. It’s also a common pay structure for freelancers, contractors, and part-time team members.
A salaried employee gets the same gross pay every pay period unless they take unpaid time off. The company usually assumes that these team members work an average of 40 hours each week, and they determine the amount of each paycheck by starting with the annual salary amount and dividing it by the number of hours or pay periods the team member is expected to work in a year.
Monthly and annual salaries are more common in jobs with consistent schedules and hours.
Both hourly and salaried people can receive paychecks on weekly, bi-weekly, twice-monthly, or monthly pay periods. The big difference is that for a team member paid by the hour, those paychecks will be a little different every time based on the amount of time they worked, while the salaried paychecks are the same every time.
Salaried team members can also be classified as exempt, which means that their employer is not obligated to pay them for overtime hours if they work more than 40 hours in a week.
Hourly team members are classified as non-exempt. If they work for more than 40 hours in a pay week, they are entitled to overtime pay at a rate of time-and-a-half (or 150%) of their regular rate according to the FLSA. Non-exempt employees must also be paid at least federal minimum wage.
But which is better?
There’s no easy answer to the question of whether a salary or an hourly wage is better. It depends on the type of job, your personal preferences, and other circumstances.
As a job seeker, you might not always be offered the choice. If you have a strong preference, look for positions that fit.
Employers can decide whether they want a position to be hourly or salaried. There are advantages and disadvantages for the company, too.
For an employer, the predictable paychecks are also a big advantage. Salaried team members put in as many hours as they must to meet their performance goals, and if that takes more than 40 hours, the company doesn’t have to pay extra for those overtime hours.
In other words, the business agrees to pay their team members a salary based on expected results, not necessarily on expected hours. If the job is well structured, it should take about 40 hours per week to meet those goals.
The main disadvantage for employers is that some team members may take advantage of their salaried positions by working far fewer hours than you expect. This puts performance goals at risk, and you will be stuck paying their full salary until performance improves or you take other disciplinary action.
For the person receiving a salary, the biggest advantage is consistency. You know exactly how much your paycheck will be every time. This makes financial planning simpler, and many people find it more comfortable than hourly paychecks. It even makes filing state and local taxes a little easier.
Some people also feel that salaried positions hold more status or prestige than hourly work.
The biggest disadvantage of a salary is that you can’t make extra money by working more hours. In fact, salaried employees usually work between 40 and 50 hours each week, and they aren’t paid for any hours over the standard 40-hour workweek.
Employers like per-hour pay structures for all kinds of positions, but especially positions with variable schedules. If you have a team member who is paid by the hour, you know that you’re only going to pay them when they’re actually working and creating value for your company.
On the other hand, keeping track of hourly positions can be more work for managers and accounting.
Time theft can be an issue with hourly positions, especially if team members rely on manual timesheets. Good time tracking software like Hubstaff helps a lot.
Companies may also be concerned about overtime expenses when hiring on a per-hour basis. You can set limits, but there might be times when you need to make a big push and ask people for extra hours. That overtime can get expensive quickly.
The situation is different for employees.
Getting paid by the hour means that you make your rate for all the time you work up to 40 hours per week. If you are a non-exempt employee, your employer must pay time-and-a-half for all the hours you work beyond 40 hours.
That overtime pay is the biggest advantage of hourly pay for team members.
Freelancers and contractors are not considered non-exempt employees because they are classified as self-employed. That means that most freelancers do not qualify for overtime pay.
However, there’s still an advantage to hourly pay for freelancers. If you bill by the hour, you can increase your income by working more hours for clients. You get paid for the work you put in at your agreed upon rate.
That means you can work fewer hours whenever you need to since you’re the one deciding on your schedule. Working fewer hours can mean a smaller paycheck, though.
The variability in paychecks is the primary drawback for people who work under this pay structure.
Job seekers can negotiate salaries and per-hour rates with their potential employers, but freelancers and contractors should set their rates before talking to prospective clients. Let’s talk about how to do that.
Freelancer rates look high compared to employees, but there’s a good reason for that.
The pay rate for a freelancer must take into account all of the unpaid work that goes into the job like administrative tasks, marketing to new clients, and non-billable client service. There are also costs associated with equipment, office space, and materials.
On top of that, people who work on freelance projects rarely work stable, 40-hour weeks. Sometimes, work is abundant. At other times, there’s not enough paying work to fill the day. It's wise to budget some extra money for those slow times, almost like a business savings account for weeks when you need it.
If a freelancer charged the same per-hour rate as an employee, they would quickly go out of business.
The rate for contract work is often twice to two-and-a-half times as much as the same work performed by an employee.
This cost difference makes sense because the freelancer assumes the costs that employers normally pay for their in-house team.
A typical employee costs 25% to 40% more than their actual salary. Plus, the business can hire freelancers as needed without feeling obligated to provide continuous work.
To help you set your own freelancer hourly rate, the answers to these questions can give you some general guidance:
What is the value of the work you do? How much is it worth to a client?
What kind of costs do you need to cover to run your business?
What are your regular monthly expenses?
How many hours will you work per week?
All of these details help you answer the most important question: how much do you need to charge in order to be profitable and comfortable?
Make sure you plan for sick time and vacation, too. You won’t have paid time off as a freelancer, but you should still allow yourself the time — and budget — to step away and recharge.
With all of that in mind, let’s figure out how much you need to charge for your freelance work.
Start with the amount of money you need to cover all of your regular monthly expenses like housing, bills, and groceries. Include your other lifestyle costs such as money for entertainment and travel, too.
Now, add your business expenses to that figure. You don't have to calculate exact taxes right now, but make sure you account for FICA taxes, federal income taxes, and state or local taxes.
Make sure to account for healthcare, retirement savings, and big equipment purchases, too.
The total of these expenses tells you the minimum gross income you need to charge to break even. Divide it by the number of hours you’ll work in a month to get your lowest possible hourly rate.
Of course, the goal is not to break even — it’s to make a profit. This is where the value of your freelance services comes in.
Use freelance marketplaces like Hubstaff Talent, Upwork, and Fiverr to see what other contractors charge for similar services. You might find a large range of hourly and per-project rates, but that’s okay. The goal of this research is just to get an idea of what businesses are willing to pay for what you do.
If most of the other rates you’re seeing are lower than your base number, that could be a sign that you need to increase the value of your services or adjust your pay expectations for this kind of work.
You can charge higher than average rates if you offer better than average service. Do you have 10+ years of experience? Are your skills hard to find? Do you have a track record of producing far better than average results?
Setting your rate is a strategic business decision. Higher rates mean you earn more money for the same amount of hours, but you may have to spend more time and effort marketing yourself to high-value clients.
Remember that you can change your rates later if you find that you’re charging too much or not enough. There’s no right or wrong answer here.
Keeping track of your hours, invoices, and pay rates for your entire team is easy with Hubstaff.
Businesses and freelancers alike love the proof-of-work features in Hubstaff. The transparent productivity measurement and other financial data help teams stay informed and connected.
With Hubstaff, tracking payroll is seamless. Simply track hours while work happens. That tracked time automatically populates detailed timesheets, and the 18 different reports show exactly how much you and your team have made in real time.
Approve timesheets with a single click and process payroll right from Hubstaff with one of the built-in payment integrations. You can also integrate with your existing financial software that handles state and local taxes.
Hubstaff time tracking software is free to try for 14 days. There’s no credit card required to start your free trial. Create your account now and see how easy it is to track and calculate your hours with Hubstaff.
Easily track hours, create invoice, and send payments with powerful time tracking software.