Freelance Rate Calculator

How to use the freelance rate calculator

1. Under Income and costs, enter your Desired annual income (take-home): what you want to keep after taxes, comparable to a net salary.
2. Add your Annual business expenses: equipment, software, office or coworking, insurance, accounting, phone, travel, training.
3. Enter Taxes and benefits (% of pre-tax earnings): the share of your profit you set aside for income tax, social contributions, health insurance and retirement. It depends on your country and situation; an accountant can give you a realistic figure.
4. Under Working time, set the Hours worked per week, Days worked per week, Weeks per year, and subtract your Vacation days, Public holidays and Sick days.
5. Set the Billable share of working time (%): the part of your working hours you can actually charge to clients.
6. Choose the Currency.

The Hourly rate, Day rate, Annual revenue needed, Monthly revenue needed, Billable hours per year and Working days per year update as you type. Where the money goes splits each billed hour into take-home income, taxes and expenses. The Project price helper turns Estimated hours and a Contingency (%) into a Project price. Copy copies the results.

Why a freelance rate is higher than a salary divided by hours

An employee’s salary of $60,000 over 2,080 hours is about $29 an hour. A freelancer who charges $29 an hour earns far less, for three reasons:

• Taxes and benefits. Employers pay part of the social contributions and often health insurance and a pension. A freelancer pays all of it.
• Expenses. The computer, software, insurance and accountant come out of the freelancer’s revenue.
• Unbilled time. Nobody pays for vacation, holidays or sick days, and a large part of the working week goes to finding clients, quoting, invoicing and admin. Many freelancers bill only 60–75% of their working time.

Formulas

• pre-tax earnings needed = take-home income / (1 − taxes and benefits %)
• annual revenue needed = pre-tax earnings + business expenses
• working days = weeks per year × days per week − vacation − holidays − sick days
• billable hours = working days × (hours per week / days per week) × billable share
• hourly rate = annual revenue / billable hours
• day rate = hourly rate × hours per day
• project price = estimated hours × (1 + contingency) × hourly rate

With the defaults ($60,000 take-home, $8,000 of expenses, 30%, 40 hours over 5 days, 52 weeks, 30 days off, 70% billable), the tool needs $93,714.29 of revenue over 1,288 billable hours: $72.76 an hour, or $582.08 a day.