Pick the income you want to take home, tell it how many hours you can realistically bill, and it works backward to the hourly rate that actually gets you there once expenses and time off are in the mix.
When you were on payroll, someone else quietly paid for your health insurance, half your payroll taxes, your laptop, and every hour you spent in a meeting instead of doing billable work. Go freelance and all of that lands on you.
So the trick isn't dividing your old salary by 2,080 hours. It's starting from the money you want to keep, adding what it costs to run your business, and spreading that over the hours you can genuinely bill in a year.
The hourly rate at the top is your break-even-plus-income number. Charge less and you're eating into either your target take-home or your expense budget.
Watch the "working weeks" and "billable hours per year" figures too. Small changes there move the rate more than people expect. Dropping from 30 billable hours a week to 20 isn't a rounding error, it's a big jump in what you need to charge.
A freelance rate has to cover the stuff an employer normally hides: unpaid time off, your own taxes, software, insurance, and the hours you spend on admin instead of billing. Once you fold all that back in, the number climbs fast.
Be honest, not optimistic. Even full-time freelancers rarely bill 40 hours a week once you subtract sales calls, invoicing, and email. Many land somewhere between 20 and 30 truly billable hours, so start there and adjust to your own logs.
It helps to. Drop your estimated tax set-aside into yearly expenses so the rate you get is closer to what you keep. Otherwise your take-home will quietly land below the target income you typed in.
Six to eight is a realistic starting point for most people once you add up vacation, holidays, sick days, and the slow weeks between contracts. Planning zero weeks off is the fastest way to end up underpriced.
Treat it as your floor, not your ceiling. It's the minimum that keeps your income and expenses covered. Value, demand, and your niche can push the number you actually quote well above it.