Setting a freelance rate by copying someone else’s hourly number is how freelancers end up working full-time for part-time money. This calculator works backwards from the income you actually want to take home: it removes the weeks you will not work, counts only your billable hours, adds an allowance for tax and benefits, and gives you the hourly and day rate you need to charge.
Estimates only. The allowance is a simple percentage added on top of your take-home target to cover self-employment tax, income tax, health insurance, retirement savings and unpaid admin time. Your real tax bill depends on your state, deductions and business costs, so check the allowance with an accountant before you quote clients.
Why your rate has to be higher than a salary
An employee earning $60,000 is paid for 52 weeks, gets holidays on top, and has an employer covering part of their tax and benefits. A freelancer targeting the same $60,000 take-home gets none of that by default. Work the example in this calculator: take off 4 weeks, bill 30 hours in each working week, and you have 1,440 billable hours — not the 2,080 hours a salary assumes. Add a 25% allowance for self-employment tax, income tax, health insurance and retirement, and you need to bill $75,000 gross. Divided by 1,440 hours, that is $52.08 an hour, or $416.67 for an eight-hour day. Charge the $28.85 an hour a $60,000 salary seems to suggest and you will land far short of your target even in a perfect year.
The two numbers freelancers get wrong
The first is billable hours. Almost nobody bills 40 hours a week: proposals, emails, invoicing, marketing and fixing revisions are all work, and none of it is billable. Most experienced freelancers bill 25 to 30 hours in a good week. The second is the allowance. Self-employment tax alone takes a real bite, and health insurance and retirement savings do not fund themselves. Keeping clean monthly records of what came in and what tax you set aside is what keeps the allowance honest — our guide to how much bookkeeping costs a small business shows what help costs when you outgrow doing it yourself.
Frequently asked questions
Should I show clients my hourly rate or a project price? Use this rate to build the project price, then quote the project. The hourly number is your internal floor: multiply it by a realistic hour estimate, add a margin for the unexpected, and never quote below the floor. What allowance percentage should I use? 25% is a common starting point for US freelancers; higher earners and states with income tax often need 30% or more. How often should I raise my rate? Recalculate whenever your target, your costs or your billable hours change — and at least once a year, because a rate that stood still while your costs rose is a pay cut.