How to use the freelance rate calculator
The calculator works backwards from what you want to earn to the rate that pays for it.
- Choose how you think about income. Pick take-home pay if you know what you want to keep after every tax, or profit before tax if you want to compare with a salary offer. The example targets $70,000 of take-home pay.
- Enter business expenses for a year: health insurance, software, hardware, a coworking desk, an accountant, professional insurance and any retirement saving that an employer would otherwise match. The example uses $12,000.
- Set the taxes. In the US, leave self-employment tax switched on and enter the share of profit you expect to pay in federal and state income tax. Outside the US, switch it off and enter your total tax and social contributions as one percentage.
- Enter the billable share, the part of your working hours a client pays for. The default of 65% sits in the 60%–70% range many freelancers plan on.
- Enter time off and hours. Weeks of vacation, days of public holidays and sick leave, the hours you work in a normal week and the length of a billed day.
The chart shows how the minimum rate changes as the billable share moves, and the table gives the rate at 50% to 90% utilization.
How the rate is calculated
The calculation runs in three steps: find the profit you need, add costs to get revenue, then divide by billable hours.
Revenue needed = Profit + Business expenses
Billable hours = (52 − Vacation weeks − Days off ÷ 5) × Hours per week × Billable share
Minimum hourly rate = Revenue needed ÷ Billable hoursWhen you enter take-home pay, the calculator solves the first line for the profit. Day rate = hourly rate × hours in a billed day; monthly revenue = yearly revenue ÷ 12; weekly revenue = yearly revenue ÷ working weeks.
For US filers, self-employment tax follows the 2026 rules:
SE tax = 12.4% × min(Net earnings, $184,500) + 2.9% × Net earningsThe 12.4% is Social Security, capped at the yearly wage base; the 2.9% is Medicare. Together they make the familiar 15.3%. Income tax is the percentage you enter, applied to the whole profit.
A worked example
You want to keep $70,000 a year after tax and expect $12,000 of business costs. You take 3 weeks of vacation and 15 days of holidays and sick leave, leaving 46.0 working weeks of 40 hours, or 1,840 hours.
To keep $70,000, you need a profit of $94,760.49: self-employment tax takes $13,389.23 and a 12% income tax set-aside takes $11,371.26. Adding expenses, the business must bring in $106,760.49 a year, about $8,896.71 a month.
At a 65% billable share you bill 1,196 hours, so the minimum rate is $89.26 an hour, or $714.12 for an 8-hour day.
Of every billed hour, $58.53 ends up as take-home pay, $20.70 goes to tax and $10.03 covers expenses. Without any costs, taxes or time off, and billing every hour, the same $70,000 would need only $33.65 an hour. The gap between those two numbers is what an employer normally pays for without showing it on your payslip.
Why freelance rates look high next to salaries
A salary is paid over about 2,080 hours a year (40 hours × 52 weeks), holidays included. Dividing the example’s pre-tax profit of $94,760.49 that way gives $45.56 an hour. The freelance rate is 1.96× that figure, for four reasons:
- Unbilled time. Finding clients, writing proposals, chasing invoices and learning new tools is work, but nobody pays for it by the hour.
- Paid time off. An employee is paid during vacation and illness; a freelancer has to earn that pay during the weeks they work.
- Benefits and equipment. Health insurance, a retirement match, a laptop and software licenses become your expenses.
- The employer’s share of payroll tax. In the US an employee pays 7.65% of wages and the employer pays the other 7.65%. Self-employed, you pay both halves.
That is why a common rule of thumb says a freelancer needs 1.5 to 2 times the hourly wage of a comparable job. It is a rough guide that varies by field: someone with low costs and steady clients may manage on less, while someone who carries expensive insurance or spends half their time selling needs more.
What changes the rate most
Each line changes one input from the example:
| Change | Minimum hourly rate | Day rate |
|---|---|---|
| The example | $89.26 | $714.12 |
| Billable share 50% instead of 65% | $116.04 | $928.35 |
| Billable share 80% instead of 65% | $72.53 | $580.22 |
| Expenses $24,000 instead of $12,000 | $99.30 | $794.38 |
| 6 weeks of vacation instead of 3 | $95.49 | $763.94 |
| 35-hour weeks instead of 40 | $102.02 | $816.13 |
| Income tax set-aside 20% instead of 12% | $98.89 | $791.10 |
Utilization moves the result more than anything else, because it divides the whole revenue figure, so an honest estimate of it matters more than precise expenses. If you are just starting, plan on the low end.
Using the minimum rate
The result is a floor, not a price. A month without work, a late-paying client or an unexpected bill pushes you below it, so many freelancers quote above the minimum to build a cash buffer. What clients will pay depends on your field and experience, which this calculator cannot see; compare the floor with market rates before you quote.
What this calculator does not include
- Exact income tax. The income tax set-aside is a flat share of profit. In practice half of the self-employment tax is deductible, some freelancers qualify for a deduction on business income, and state taxes vary. Our income tax calculator gives a fuller estimate.
- The 0.9% Additional Medicare Tax on high earnings is not added.
- Retirement saving is not separate. Include it in expenses if you want the rate to fund it.
- Uneven work. The rate assumes billable hours are spread evenly across the year. Seasonal work, a slow first year or one large client leaving changes the picture.
- Payment terms. Late payments and unpaid invoices are not modeled, though they cost real money.