How to set your freelance rate (the math employees get wrong)
A $75,000 salaried job is not the same as $75,000 of freelance revenue. As an employee, your employer covers half your payroll taxes, your health insurance, paid time off, equipment, and the hours you spend in meetings or training. As a freelancer, all of that comes out of your rate — and only your billable hours generate income. A 40-hour week rarely contains 40 billable hours; 25 is more realistic once you account for admin, sales, and unpaid work.
This calculator works backward from what you actually want to keep. It adds your business expenses, grosses up for the taxes you'll owe as a self-employed person, then divides by the billable hours you'll realistically work in a year. The result is the floor — the minimum you can charge without quietly losing money.
Why most freelancers undercharge
The classic mistake is taking a desired salary, dividing by 2,080 (40 hours × 52 weeks), and quoting that. That math assumes every working hour is billable and ignores taxes, expenses, and time off entirely. Freelancers who price this way often end up earning less than they did as employees while taking on far more risk.
What to do with the number
Treat the calculated rate as your minimum. Raise it for rush work, difficult clients, or specialized expertise. Many freelancers find their honest break-even rate is 50–100% higher than what they'd been charging — which is exactly why this calculation matters.
FAQ
Should I charge hourly or a fixed project price?
Use this hourly rate as the basis for project quotes: estimate the hours a project will take, multiply by your rate, then add a buffer. Fixed pricing rewards you for working efficiently, but only if your hourly floor is correct first.
What tax percentage should I use?
In the US, self-employed workers owe ~15.3% self-employment tax plus income tax, so a combined set-aside of 25–35% is common. Your actual rate depends on your country, state, income level, and deductions. When in doubt, set aside more.
How many billable hours are realistic?
Full-time freelancers typically bill 20–30 hours per week even while working 40+, because the rest goes to finding clients, admin, and unpaid revisions. Be honest here — overestimating billable hours is the fastest way to underprice.