Freelance Rate Calculator
Price the hours you can bill, not the hours you sit at a desk.
Freelance Rate Calculator
Set an hourly rate from the income you want, the tax you owe, and the hours you can actually bill.
After tax, per year
Income tax plus self-employment tax
Per year
Client work only, not admin
Holiday, sick leave, gaps
The trap is pricing from a 40-hour week. Only billable hours earn money; admin, sales, and invoicing happen inside the same week. The calculator grosses income up for tax and expenses before dividing by billable time.
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What This Calculator Does
The Freelance Rate Calculator works backwards from the life you want: a target take-home income, the tax you need to set aside, the annual cost of running the business, and the hours you can genuinely bill. It returns the hourly rate, day rate, and annual revenue that make those numbers add up, instead of pricing from a salaried equivalent and discovering the gap at tax time.
How It Works
The target income is grossed up for tax by dividing by (1 - tax rate). Business expenses are added because they are paid from revenue before income reaches you. That revenue requirement is divided by annual billable hours, calculated as billable hours per week multiplied by (52 - weeks off). A day rate multiplies the hourly rate by the length of a billable day. Admin, sales, invoicing, and holiday are deliberately outside the billable hours, which is why the resulting rate is higher than a salary divided by 2,080 hours.
Example
You want $80,000 after tax, expect a combined 30% tax rate, and spend $12,000 a year on software, insurance, and accounting. You can bill 25 hours a week and take 4 weeks off. Billable hours are 25 x 48 = 1,200. Revenue needed is 80,000 / 0.70 + 12,000 = $126,286. The hourly rate is $126,286 / 1,200 = $105.24, and a 6-hour billable day is $631.43.
Formula
hours per week x (52 - weeks off)target income / (1 - tax rate) + business expensesrevenue needed / billable hours per yearhourly rate x billable hours per daytarget income / billable hours per yearWhat actually reaches you per billed hour, after tax and business costs.
Reading the Results
Hourly rate
The minimum you need to charge for every billable hour to hit the target after tax and expenses. Treat it as a floor, not a ceiling: it includes no margin for slow months or unpaid proposals.
Revenue needed
The gross amount the business must invoice in a year. It is larger than the target income because tax and expenses are paid out of it.
Kept per billable hour
The target income divided by billable hours. The gap between this and the hourly rate is tax plus business costs, and it is the number to remember when a client asks for a discount.
Sources and References
IRS - Self-Employment Tax
Social Security and Medicare contributions for self-employed people
Explains why a freelancer sets aside more than income tax alone. The exact combined rate depends on earnings and jurisdiction.
IRS Publication 535 - Business Expenses
Which ordinary and necessary costs are deductible
A reference for deciding what belongs in the business-expenses field rather than in the target income.
References identify the method or data behind this calculator. Where a standard or tariff changes, the current edition applies, and the assumptions stated above take precedence over a remembered figure.
Frequently Asked Questions
Why not just divide my target income by 2,080 hours?
Because almost no freelancer bills 40 hours in every one of 52 weeks. Sales, admin, invoicing, learning, holiday, and quiet periods are unpaid. Dividing by 2,080 hides those hours and produces a rate that cannot sustain the target.
What tax rate should I use?
Use your best estimate of the combined effective rate for income tax and self-employment contributions, not just the marginal bracket. It varies by country, income, and deductions. If you are unsure, ask an accountant; the calculator is a planning tool, not tax advice.
Does the rate cover health insurance and retirement?
Only if you include them. Put premiums and pension contributions in business expenses, or add them to the target income if you prefer to treat them as personal costs. The calculator does not add them automatically.
Should every client pay this rate?
The result is an average floor that funds your year. You can charge more for urgent or specialist work and less for a long retainer that fills otherwise empty time, as long as the mix still covers the annual revenue requirement.
What if I bill fewer hours than expected?
The rate rises. That is the honest signal: either raise the rate, reduce expenses, or treat the shortfall as a decision to work less rather than a pricing failure. Re-run the calculator with the hours you actually billed.