How to Calculate Hourly Rate
What is Hourly Rate?
An hourly rate calculator converts an annual salary to an equivalent hourly rate, or vice versa. It accounts for the number of working hours per year, helping employees compare job offers, overtime rates, and freelance rates.
Step-by-Step Guide
- 1Determine working hours per year: typically 52 weeks × 40 hours = 2,080 hours/year
- 2Subtract paid holiday and bank holidays (usually 25–33 days in UK = ~200 hours)
- 3Hourly rate = Annual salary / Effective working hours
- 4Freelance rate must be higher to account for no employer benefits, taxes, and downtime
Worked Examples
Input
Annual salary £40,000 · 1,820 effective hours
Result
£21.98/hour
£40,000 ÷ 1,820
Input
Hourly rate $25 · 2,080 hours
Result
$52,000 annual equivalent
Full-time equivalent