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Freelance Rate Calculator
Use this free freelance rate calculator to turn the salary you want into a rate you can actually charge. Enter your target annual salary, add overhead and a tax allowance, and tell the calculator how many of your hours are really billable — and it gives you your hourly, daily, weekly, monthly, and project rates in one go, so you never quote a number that leaves you short at the end of the year.
| Rate | Amount |
|---|---|
| Hourly rate | $63.10 |
| Daily rate (8 hours) | $504.81 |
| Weekly rate | $2,019.23 |
| Monthly rate | $8,750.00 |
| Project rate (20 hours) | $1,262.02 |
| Billable hours per year | 1,664 |
| Gross revenue needed per year | $105,000.00 |
How it works
The most common freelance pricing mistake is dividing your old salary by 2,080 hours and charging that as your hourly rate. That number is too low, because an employee's salary is only part of what their work costs. An employer also pays for health insurance, payroll taxes, software, equipment, office space, and paid time off — and as a freelancer, all of that comes out of your rate. On top of that, you pay self-employment tax, and some of your hours go to work nobody pays for. This calculator builds all three of those realities into one formula.
The formula has three steps. First, the target salary is grossed up for overhead: multiply it by one plus the overhead percentage. At 40 percent overhead, a $60,000 salary becomes $84,000. Second, it is grossed up again for taxes: multiply by one plus the tax allowance. At a 25 percent tax allowance, $84,000 becomes $105,000 — the gross revenue you need to bring in over the year. Third, divide that revenue by the number of hours clients actually pay for: weeks per year times hours per week times the billable percentage. At 52 weeks, 40 hours a week, and 80 percent billable, that is 52 × 40 × 0.80 = 1,664 billable hours. So $105,000 ÷ 1,664 = $63.10 per hour.
Daily rate = hourly rate × 8 · Weekly rate = hourly rate × billable hours per week
Overhead is the part most new freelancers underestimate. It covers health insurance, which can run $400 to $800 a month for an individual plan, plus software subscriptions, a laptop and its replacement cycle, internet and phone, coworking or a home office, accounting and invoicing tools, and the gaps between clients when no money comes in. Twenty-five to 50 percent is the usual range, and 40 percent is a realistic middle ground for a solo freelancer who buys their own benefits. If an employer used to cover your health insurance and retirement match, lean toward the high end.
The tax allowance covers income tax plus self-employment tax, which is 15.3 percent on most net freelance income and pays for Social Security and Medicare. Many freelancers set aside 25 to 30 percent of every payment for taxes, and the calculator defaults to 25 percent. The billable percentage is the share of your working hours that clients pay for. At 80 percent in a 40-hour week, 32 hours are billable and 8 go to admin, marketing, invoicing, proposals, and learning. New freelancers often run at 50 to 60 percent, while established ones reach 75 to 85 percent. Be honest about this number — it is the single biggest lever on your rate after overhead.
Worked example
A designer wants to replace a $60,000 salary. She expects 40 percent overhead, sets aside a 25 percent tax allowance, works 52 weeks a year at 40 hours a week, and expects 80 percent of her time to be billable.
Step 1: Gross up for overhead — $60,000 × 1.40 = $84,000.
Step 2: Gross up for taxes — $84,000 × 1.25 = $105,000 of gross revenue needed per year.
Step 3: Billable hours — 52 × 40 × 0.80 = 1,664 billable hours per year.
Step 4: Hourly rate — $105,000 ÷ 1,664 = $63.10 per hour.
Step 5: Daily rate — $63.10 × 8 = $504.81 per day. A 20-hour project would be quoted at $63.10 × 20 = $1,262.02.
The result is $63.10 per hour — noticeably more than the $28.85 per hour you get by simply dividing $60,000 by 2,080. That gap is the whole point: the naive rate leaves no room for health insurance, taxes, software, or the eight unbillable hours in every week, and a freelancer who charges it will fall behind within months.
FAQ
How do I calculate my freelance hourly rate?
Start with the salary you want to replace, add overhead and a tax allowance, then divide by your billable hours. For a $60,000 target salary with 40 percent overhead, a 25 percent tax allowance, 80 percent billable time, and a 40-hour week, the rate is $63.10 per hour.
What overhead should a freelancer include in their rate?
Most freelancers add 25 to 50 percent for overhead: health insurance, software, equipment, coworking, accounting, unpaid admin time, and time between clients. This calculator defaults to 40 percent, which is a realistic middle ground for a solo freelancer who buys their own benefits.
What percentage of my freelance income goes to taxes?
As a self-employed freelancer you pay income tax plus self-employment tax of 15.3 percent on most of your net income, covering Social Security and Medicare. Many freelancers set aside 25 to 30 percent of each payment for taxes. The exact share depends on your income, state, and deductions, so confirm it with a tax professional.
What is a billable utilization rate?
Billable utilization is the share of your working hours that clients actually pay for. At 80 percent utilization in a 40-hour week, 32 hours are billable and 8 hours go to admin, marketing, invoicing, and learning. New freelancers often run at 50 to 60 percent, while established ones reach 75 to 85 percent.
Should I charge hourly or per project?
Hourly billing is safer when the scope is unclear, because you get paid for every hour you work. Project pricing earns more once you are fast, because you keep the value of your speed. A good rule is to quote projects using your hourly rate times your estimated hours, then add a margin for revisions and risk.