Freelance Rate Calculator
New freelancers routinely underprice themselves by anchoring their rate to what they made as a salaried employee, without accounting for self-employment tax, the unbilled hours spent on admin and client-finding, or the total absence of paid time off. This works backward from your income goal, business expenses, and realistic billable hours to a rate that actually covers all of it.
You need to earn $108,235 total to hit your income goal after expenses and margin.
That's spread across 1536 billable hours over 240 working days.
This is a planning estimate, not financial advice. It doesn't account for taxes, which vary significantly by location and filing status.
How to use the Freelance Rate Calculator
- Enter your desired annual income (the take-home amount you want to earn after expenses).
- Add your estimated annual business expenses such as software, equipment, and insurance.
- Set the number of vacation days, sick days, and holidays you plan to take off.
- Specify how many hours per week you spend on non-billable work like admin and marketing.
- Review your recommended hourly and daily rates to make sure they meet your financial goals.
The billable-hours trap
A freelancer working 40 hours a week rarely bills 40 client hours. A more realistic split is often somewhere in the range of 25–30 billable hours, with the rest going to invoicing, proposals, emails, and finding the next client. If you calculate your rate assuming all 40 hours are billable, you'll consistently earn less than your target income no matter how "reasonable" the rate looks on paper. This calculator asks for your realistic billable hours specifically to avoid that trap.
Frequently asked questions
How do I account for self-employment tax in my rate?
Add it as a separate line item in your target income, since as a self-employed worker you're generally responsible for both the employee and employer portions of payroll-style taxes that a traditional employer would otherwise split with you.
What's a reasonable number of billable hours to plan around?
Many freelancers plan around roughly 25–30 billable hours per 40-hour work week once admin, client-finding, and non-billable overhead time are accounted for. Adjust based on your own workflow and niche.
Should I include paid time off in my rate calculation?
Yes. Since nobody else is funding your time off, build the cost of vacation and sick days directly into your target annual income before dividing by billable hours, rather than treating time off as free.
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