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No matter why you need it, this handy hourly rate calculator is a quick and easy way to get the insights you need. It can even help you approximate your monthly salary based on your hourly rate.
Freelancers, hiring managers, employees, and entrepreneurs must make informed decisions about hourly rates. For instance, if you’re offered a salaried position as a new job, an hourly paycheck calculator can tell you your monthly take-home pay, essentially your monthly salary, so you know you can pay your bills.
Jump in and use this free tool to convert from salary to hourly, estimate an annual wage, or figure out your freelance rate 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, which could represent your monthly salary immediately. For more valuable 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 various forms. Pay rates are commonly given in these ways:
To convert between different rates, use this chart to help. It shows how many hours, days, or work weeks are in a specific 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 hourly wage.
You can also do calculations the other way around. Let’s say you know the hourly wage and want to figure out how much pay to expect monthly. There are an average of 160 hours 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 don’t consider state and local taxes or other withholdings.
Also, these numbers do not account for vacation or sick time. Unpaid time off can affect your rate calculations, especially if you use this chart to help set contract work rates.
We're not here to give you tax advice, but remember 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 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.
Navigating setting an hourly wage for a job can be a complex task for hiring managers. You aspire to attract the ideal talent, but overspending might lead to budgetary complications that will inevitably force a sacrifice elsewhere.
It's crucial to ensure that the hourly wage rates for an open position are meticulously considered, considering your fiscal allowances for that role, the rates rival companies may be offering, and the prospective value this recruit might bring to your company.
A common strategy that most companies employ involves establishing a pay range for an open position, providing some flexibility during the hiring process. Candidates with extensive experience and superior skill sets generally present more opportunities and are significantly more likely to deliver rapid value to your company. Therefore, offering such individuals a higher rate than those with less experience makes perfect sense.
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 significant 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 hourly wage means that each paycheck is calculated based on the hours worked during that pay period. Most of the time, this demands that the hourly team member meticulously track their time, 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 number of hours worked every pay period might change. It’s also a standard pay structure for freelancers, contractors, and part-time team members.
In contrast, an employee on an hourly salary, often referred to as a salaried employee, receives the same gross pay every pay period unless they take unpaid time off. These employees are generally assumed to work an average of 40 hours weekly. The company determines its hourly 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 and gross pay are more common in jobs with consistent schedules and hours. Both hourly employees and salaried people can receive paychecks on weekly pay, bi-weekly pay, twice-monthly pay, or monthly pay periods. The critical difference is that for a team member paid by the hour, those paychecks will vary every time based on the amount of time they worked. On the other hand, the salaried wages maintain a consistent gross pay each time.
Salaried team members can also be classified as exempt, meaning their employer is not obligated to pay them for overtime hours if they work more than 40 hours 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 the federal minimum wage.
But which is better? That depends on several factors, including the individual's lifestyle, financial goals, and the flexibility they need in their work schedule. Ultimately, the question of an hourly wage versus a salaried arrangement is a personal one that requires careful consideration.
There’s no easy answer to 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, predictable paychecks are also a significant 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 its team members a salary based on expected results, not necessarily on expected hours. If the job is well structured, meeting those goals should take about 40 hours per week.
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 most significant advantage is consistency. You know exactly how much your paycheck will be every time, simplifying financial planning and filing state and local taxes.
Some people also feel that salaried positions hold more status or prestige than hourly work.
The most significant disadvantage of a salary is that you can’t make extra money by working more hours. Salaried employees usually work between 40 and 50 hours each week and 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 jobs with variable schedules. If you have a team member who is paid by the hour, you know you will only pay them when 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 per hour. 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 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 your work hours beyond 40 hours per week.
Overtime pay is the most significant advantage of setting an hourly wage for team members.
Freelancers and contractors are not non-exempt employees because they are 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 increasing client working hours. You get paid for the work you put in at your agreed-upon rate.
That means you can work fewer hours whenever necessary since you decide your schedule. Working fewer hours can mean a smaller paycheck, though. The wage variability is the primary drawback for people who work under this pay structure.
Job seekers can negotiate salaries and hourly rates with 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 consider 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 work hours day. Budgeting extra money for those slow times is wise, almost like a business savings account for weeks when needed.
If freelancers charged the same per-hour rate as employees, 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 an employee performs.
This difference makes sense because the freelancer assumes the costs employers normally pay for their in-house team.
A typical employee costs 25% to 40% more than their salary. Plus, the business can hire freelancers as needed without feeling obligated to provide continuous work.
To help you set your 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 these details help you answer the most critical question: how much do you need to charge 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 that in mind, let’s figure out how much you need to charge for your freelance work.
Start with the money you need to cover your monthly expenses like housing, bills, and groceries. Include your other lifestyle costs, such as money for entertainment and travel.
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.
Remember to account for health care, retirement savings, and big equipment purchases.
The total of these expenses tells you the minimum gross income you need to charge to break even. Divide it by how many 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 an extensive range of hourly and per-project rates, but that’s okay. This research aims to understand 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 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 productivity features in Hubstaff. 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 from Hubstaff with one of the built-in payment integrations. You can also integrate with your existing financial software for 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.