— Salary & Income
Freelance Rate Calculator
Find the hourly or day rate to charge as a freelancer. Enter target income, billable hours, expenses, benefits, and tax assumptions to see the rate needed after utilisation, self-employment tax, and non-billable time.
Required hourly rate
$67.93
- Day rate
- $543.47
- Revenue to bill (year)
- $91,303.64
- Billable hours / year
- 1,344
- Rate at 100% utilisation
- $47.55
Try: $80k target, 40h/week, $100k target, 65% utilisation, $60k + $12k costs + health, $120k target, 25 billable h/week
— Rate build-up
| Build-up | Annual |
|---|---|
| Target income | $80,000 |
| + Self-employment tax | $11,303.64 |
| = Revenue to bill | $91,303.64 |
— Rate build-up
Download— How it works
Revenue to bill = target income + self-employment tax + business expenses + self-funded benefits + profit. Billable hours/year = hours/week × weeks × utilisation. Rate = revenue to bill ÷ billable hours.
Why your rate isn’t your salary ÷ 2,080
A common mistake is to take a target salary, divide by 2,080 working hours, and quote that. It badly undercharges, for two reasons. First, you can’t bill every hour — admin, marketing, invoicing, sales calls and learning eat 30–40% of your time, so real billable utilisation is around 60–70%. Second, you’re now the employer too: you cover the full self-employment tax (both FICA halves), your own health insurance and retirement, your software and equipment, and you need a profit buffer. This calculator builds the rate up from your target, adds those costs, then divides by the hours you can genuinely bill.
Worked example — $80,000 target, 40 h/week × 48 weeks at 70% utilisation: Billable hours ≈ 1,344. Add self-employment tax (~$11,300) → bill ≈ $91,300 a year. Rate ≈ $68/hour (about $543/day) — versus just $47.55 if you could bill every hour.
The two things people miss
Utilisation is the big one: at 70%, a 40-hour week is only 28 billable hours, so the same revenue has to come from fewer hours and the rate rises accordingly. The other is the employer load. As an employee, your employer quietly pays half your FICA, often most of your health premium, and a retirement match — perhaps 20–30% on top of salary. Freelance, that all lands on you. The build-up below shows each piece, so you can see why a $40/hour job becomes a $70–80/hour freelance rate just to stand still.
How to use it
Set the income you actually want to keep, your realistic working hours and weeks, and a utilisation you can defend. Add costs you carry yourself — expenses, health, retirement — and a profit margin if you want a cushion. The hourly and day rates are your floor; charge more where the market allows. The self-employment tax uses the US SE-tax method (15.3% on net earnings), so it’s a US-oriented estimate. For a fixed-price quote, enter the project’s hours.
— Reader questions
How do I calculate my freelance hourly rate?
Add up everything you must cover in a year — your target income, self-employment tax, business expenses, self-funded benefits and a profit margin — then divide by the hours you can actually bill (working hours × weeks × utilisation). For an $80k target at 70% utilisation that’s roughly $68/hour.
What is billable utilisation, and why does it matter?
It’s the share of your working hours you can actually invoice. Admin, marketing, sales and learning take 30–40%, so utilisation is usually 60–70%, not 100%. Lower utilisation means the same income must come from fewer billable hours, so your rate has to be higher.
Why is my freelance rate so much higher than an employee’s hourly pay?
Because you cover what an employer used to absorb: the full self-employment tax (both FICA halves), your own health insurance and retirement, paid time off, and business costs — often 40–60% on top — plus you can’t bill every hour. A $40/hour employee equivalent is often a $70–80/hour freelance rate.
How do I set a day rate or project price?
The day rate is your hourly rate × billable hours in a day (8 by default). For a fixed project, multiply the hourly rate by the estimated hours — enter the project hours to see it.
Does this include income tax?
The target is your pre-income-tax personal income, and the build-up adds self-employment tax (the 15.3% Social Security + Medicare). You still pay income tax out of the target, like anyone — use the freelance-tax or self-employment calculators for that full picture.