Calculator
Freelance rate calculator
This is for anyone who wants a rate that comes from their own numbers instead of a guess. Enter what you want to earn, what the business costs, how much time you will really bill, and the share of profit you plan to put aside for tax. It shows the hourly and day rate and every step of the arithmetic. It runs in your browser and nothing is sent anywhere.
Worked example (shown when scripts are off): a goal of 60,000, expenses of 6,000 and a set-aside of 25 percent. The 25 percent is only an arbitrary number to show the arithmetic, not a suggestion. Profit needed is 60,000 divided by 0.75, or 80,000. Add expenses for revenue of 86,000. With 6 weeks off, 25 billable hours and 4 billable days a week, that is 46 working weeks, 1,150 hours and 184 days, so about 74.78 per hour and 467.39 per day.
Before you decide
This gives the lowest rate that meets your own targets, not the rate the market will pay. Treat it as a floor, then compare it with what clients in your field actually pay and with how you want to price the work.
The formula in words
There are four steps. First, profit needed is your income goal divided by one minus your set-aside share. If you set aside 20 percent of profit, you divide by 0.8. Second, revenue needed is profit needed plus yearly business expenses. Third, billable hours are the weeks you work (52 minus weeks off) times billable hours per week, and billable days are the same weeks times billable days per week. Fourth, hourly rate is revenue divided by billable hours, and day rate is revenue divided by billable days.
Why billable hours are lower than working hours
Finding clients, writing proposals, invoicing, admin and revisions you cannot charge for all take time that nobody pays you for. Many freelancers bill far fewer hours than they work, so entering a full-time 40 will give a rate that is too low. If you are not sure, track your time for a few weeks and use the real billable figure. The article on how to know if a rate is high enough covers this in more detail.
About the tax set-aside
The calculator does not know your country, your income or your rules, so it does not supply a percentage. You type your own, ideally after asking a qualified tax professional or checking your tax authority. In the United States, the IRS says self-employed people generally pay self-employment tax as well as income tax, and pay estimated tax in installments through the year because nobody withholds it for them. Other countries have different rules. If you do not know yet, enter 0 to see the rate before any set-aside, and then redo it once you do.
Limits
- The set-aside here is a share of profit (income after expenses). Some systems work differently, so check how yours does.
- It does not model unpaid invoices, price changes, benefits you would get as an employee, retirement saving, or slow months, so leaving some slack is wise.
- Day rate divides by the billable days you enter, so it will not always equal hourly rate times eight.
- This is general information, not tax, legal or financial advice.
Where this comes from
The calculation is ordinary arithmetic. For the tax note, we checked the Internal Revenue Service's self-employed individuals tax center, which states that self-employed people generally pay self-employment tax in addition to income tax and pay estimated taxes quarterly. We did not research other countries' rules.