How to use the freelance rate calculator
- Enter the take-home pay you want each year — what you would like to keep after taxes and costs.
- Add up your yearly business expenses: software, hardware, internet, insurance, health cover, accountant, marketing, coworking.
- Set a tax rate on your profit. In the US, 25–35% is a common planning figure.
- Be honest about billable hours per week and weeks off for holidays, vacation and sick days.
- Add a buffer for quiet months, savings or growth if you like.
The formula
Pre-tax profit = Take-home pay ÷ (1 − Tax rate) Revenue needed = (Pre-tax profit + Expenses) × (1 + Buffer) Billable hours = Billable hours per week × (52 − Weeks off) Hourly rate = Revenue needed ÷ Billable hours Day rate = Hourly rate × Hours in a billed day
Worked example
- Take-home goal $60,000 at a 25% tax rate → profit needed = 60,000 ÷ 0.75 = $80,000
- Add $6,000 of expenses → revenue needed = $86,000 (about $7,167 a month)
- 25 billable hours × 46 weeks = 1,150 hours
- Rate = 86,000 ÷ 1,150 = $74.78 an hour, or about $598 for an 8-hour day
An employee earning the same $80,000 before tax over 2,080 hours is paid $38.46 an hour — the freelance rate is almost double, because of unbilled time, expenses and no paid leave.
Billable hours reality check
| Billable hours / week | Weeks worked | Hours / year | Rate for $86k revenue |
|---|---|---|---|
| 20 | 46 | 920 | $93.48 |
| 25 | 46 | 1,150 | $74.78 |
| 30 | 46 | 1,380 | $62.32 |
| 35 | 48 | 1,680 | $51.19 |
What to include in expenses
- Health insurance — often the largest cost for US freelancers.
- Retirement savings such as a SEP-IRA or Solo 401(k), since no employer contributes.
- Equipment and software: computer, phone, subscriptions, cloud storage.
- Professional costs: accountant, legal templates, liability insurance, licences.
- Marketing: website, portfolio, networking events and platform fees (some marketplaces take 10–20%).
Setting your final price
The result is your minimum rate — the point where freelancing pays what you need. Your market rate may be higher: research what others with similar skills charge, and price by the value you create where you can. Raise rates for new clients first, review them every year, and remember that clients who push hardest on price are often the most demanding. Once you have a rate, the time card calculator helps track billable hours for invoices.
Outside the US
The same method works anywhere — just change the tax rate and currency. In the UK, include income tax and National Insurance; in Canada, CPP contributions for the self-employed; in the EU, social contributions and VAT registration rules, which are separate from your rate.