Comprehensive Guide
Learn more in our Planning Guide.
How it works
The most common freelance mistake is quoting a rate from an employee salary — an employee's $80,000 costs the employer roughly $105,000, and the employee never pays self-employment tax, overhead or unpaid weeks. The engine reverses the whole stack: take the income you want to keep, add the tax burden (income tax plus the self-employment tax a W-2 job's employer would have paid), add overhead as a percentage, and divide the resulting gross target by the hours you can actually bill. The billable-hours input is where plans die: of 2,080 desk hours a year, the reality of admin, sales, learning and holidays usually leaves 1,200-1,600 — and quoting the rate on the desk hours quietly underprices every job by a third. The output rate is the floor, not the target: experienced freelancers usually charge above it, then negotiate down; charging below it means the business subsidises the client. Every field in this calculator exists for a reason. Enter Desired take-home income, Billable weeks per year, Billable hours per week, Overhead (as % of income), Self-employment tax (as %), and the engine recomputes the results instantly — no signup, no email, and nothing is sent to a server, because the math runs entirely in your browser. Change one input at a time to see which lever moves the result most; that sensitivity, not any single number, is usually the real insight. The worked example below the form uses realistic defaults so you can sanity-check the output before trusting it with your own figures, and the formula is published on the page so you can verify every step of the arithmetic yourself.Formula
Gross needed = desired / (1 - (overhead + tax)/100) | Rate = gross / (billable weeks x hours/week)
Tips
- Round up — a rate of $82/hour should be quoted at $85 or $90; the odd number reads as amateur.
- Track billable hours for a month before setting the rate; the estimate is usually optimistic.
- Raise rates on existing clients annually — the hardest conversation pays the most.
- If you cannot charge the rate, the fix is less overhead or more specialised skills, not working more hours.
Frequently asked questions
How do I calculate my freelance hourly rate?
Start from desired take-home income, add self-employment and income tax (often 25-40% combined), add overhead (software, insurance, marketing — typically 20-30% of income), then divide by real billable hours: billable weeks times billable hours per week. The result is the minimum rate that makes the business sustainable.
How many hours can I actually bill?
Realistic billable hours run 1,200-1,600 a year (25-32 per week across 48 weeks), even for full-time freelancers. The rest of the working week goes to proposals, admin, learning and holidays. Quoting on nominal desk hours is the classic underpricing error.
What should my tax percentage be?
Self-employed US filers pay 15.3% SE tax plus federal income tax at their effective rate, typically 10-22%, plus state — commonly 30-40% combined. Enter your realistic total in the tax field; the engine's job is making that burden explicit in the rate.
Should I charge hourly or by project?
Projects price value and reward efficiency; hourly rewards slowness and punishes expertise. Many freelancers set an internal hourly rate for estimating, then quote projects from it — the calculator gives the internal number either way.