Freelance Rate Calculator
Convert your desired annual salary into freelance rates. Accounts for taxes, business expenses, non-billable time, and profit margin to calculate sustainable hourly, daily, and project rates.
The amount you want to take home after taxes and expenses
52 minus vacation, holidays, sick days
Total working hours including admin
Income + self-employment taxes (typically 25-35%)
Insurance, software, equipment, office, etc.
Time spent on actual client work (typically 60-80%)
Buffer for growth, savings, emergencies
Enter your desired salary above to calculate your freelance rates
Table of Contents
Why Freelance Rates Differ from Salaries
Many new freelancers make the mistake of simply dividing their desired salary by 2,080 hours (52 weeks × 40 hours). This approach significantly undervalues their work and often leads to burnout or financial stress.
As a freelancer, you're not just an employee—you're running a business. You need to account for costs that traditional employers cover: health insurance, retirement contributions, paid time off, equipment, software, office space, and the self-employment tax that employers typically pay half of.
Additionally, not all of your working hours are billable. Time spent on marketing, invoicing, client communication, professional development, and administrative tasks doesn't directly generate income but is essential to your business.
How This Calculator Works
Our calculator uses a comprehensive formula to determine your sustainable freelance rate:
Step 1: Calculate Billable Hours
We start by determining your actual billable hours: (Working weeks × Hours per week) × Billable percentage. This accounts for the reality that not all your time is spent on paying client work.
Step 2: Base Hourly Rate
Your desired salary divided by billable hours gives the minimum you need to charge per hour to meet your income goal.
Step 3: Account for Taxes
We gross up the rate to account for self-employment taxes. Since you want to take home your desired salary after taxes, we divide by (1 - tax rate) to find what you need to earn pre-tax.
Step 4: Add Overhead
Annual business expenses are divided across your billable hours and added to your hourly rate.
Step 5: Add Profit Margin
Finally, we add a profit margin for savings, business growth, emergencies, and the value you bring beyond just your time.
Understanding Billable Hours
One of the biggest mistakes new freelancers make is assuming they can bill for all 40 hours in a work week. In reality, a significant portion of your time goes to non-billable activities:
- Marketing & Sales (10-20%): Finding new clients, proposals, networking, social media
- Administration (5-15%): Invoicing, contracts, bookkeeping, email management
- Client Communication (5-10%): Non-billable meetings, scope discussions, feedback calls
- Professional Development (5-10%): Learning new skills, staying current in your field
Typical billable hour percentages by experience level:
New Freelancers
50-60%
More time on marketing
Established
65-75%
Steady client base
In-Demand Expert
75-85%
Clients come to you
Pricing Strategies
Hourly Billing
Best for: Ongoing work, unclear scope, time & materials contracts
Hourly billing is straightforward but can limit your earning potential. Clients know exactly what they're paying, but you're trading time for money with a ceiling on your income.
Project-Based Pricing
Best for: Well-defined projects, experienced freelancers, productized services
Estimate hours using your calculated rate, then add 15-25% buffer for scope creep and unknowns. As you get faster, you effectively increase your hourly rate without raising prices.
Value-Based Pricing
Best for: High-impact work, experienced professionals, strategic consulting
Price based on the value you deliver, not time spent. If your work will generate $100,000 in revenue for a client, charging $10,000 is reasonable regardless of hours worked.
Retainer Agreements
Best for: Predictable income, ongoing relationships, preferred clients
Offer a monthly retainer for a set number of hours or deliverables. Often priced at a slight discount (5-10%) in exchange for guaranteed recurring revenue.
Frequently Asked Questions
In the US, freelancers typically face 25-35% in combined taxes. This includes federal income tax (10-37% depending on bracket), self-employment tax (15.3%), and potentially state income tax. The self-employment tax covers Social Security and Medicare—as an employee, your employer pays half, but freelancers pay the full amount.
Research rates on platforms like Glassdoor, LinkedIn, and industry-specific resources. Talk to other freelancers in your field. Your rate should reflect your experience, specialization, and the value you provide. If you're winning every project you bid on, your rates might be too low. If you're rarely winning, they might be too high—or you need better positioning.
Yes, it's common and acceptable. You might charge more for rush work, complex projects, difficult industries, or clients with bigger budgets. Some freelancers offer lower rates for nonprofits, startups, or long-term retainer clients. Just ensure your base rate covers your costs and desired income.
Review your rates annually at minimum. Raise them when: you've gained significant experience or skills, demand for your services increases, your costs go up, or you're consistently booked solid. Give existing clients 30-60 days notice before rate increases. New clients get your new rates immediately.
First, ensure you're talking to clients who can afford your services. If rate objections are common: focus on communicating value, not just price; offer different service tiers; consider whether your positioning matches your pricing. Sometimes "too expensive" means the client doesn't understand your value or isn't your ideal customer.
Yes! Always specify the number of revision rounds included in project prices (typically 2-3). Additional revisions should be billed at your hourly rate. This protects you from endless revision cycles and encourages clients to provide clear feedback upfront.
Start by tracking time on project-based work to understand how long tasks actually take. Build a database of project types and typical hours. Then, price new projects based on your historical data plus a buffer. As you get more efficient, your effective hourly rate increases while clients enjoy predictable pricing.
A 15-25% profit margin is typical and healthy. This buffer covers unexpected expenses, slow periods, business growth investments, and retirement savings beyond what you're already planning. Some freelancers build in higher margins (30%+) to accelerate savings or fund future business expansion.