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Freelance rate calculator

Most freelancers set a rate by copying somebody else's. This works backwards from what you need to live on, and shows you where each billed hour goes.

• No sign-up
• Nothing stored
• Any currency

Why the usual arithmetic gives the wrong answer

The instinctive method is to take the salary you want, divide by 12 months, then by the hours in a month, and call that your rate. It produces a number that is roughly half of what you need, for three reasons that compound.

You cannot bill every hour you work. Proposals, invoicing, sales calls, admin, bookkeeping, marketing, dead time between projects — none of it is billable, and all of it is work. A freelancer billing 60% of their working hours is doing well; many are nearer 50%. That factor alone nearly doubles the rate you need.

Nobody pays you to be ill or on holiday. A salary quietly includes about five to six weeks of paid time off plus public holidays. As a freelancer that is seven weeks of the year with no revenue, and the rate has to cover it.

Your costs come out of the same money. Software, hardware, an accountant, insurance, a workspace, training, bank charges, the phone. A salaried person never sees these; for you they come off the top.

The number that changes everything

Move the billable share slider and watch the rate. From 80% down to 50% the required rate rises by roughly 60% — with every other input untouched.

This is the single most common mistake in freelance pricing: setting a rate as if every working hour were sellable. If you take one thing from this page, take that slider seriously and be honest with it. If you have never measured, 55–60% is a realistic starting assumption for solo work; measure it once and you will never guess again.

How the calculation runs

1. Take-home you want — what you need in your pocket, after tax and after business costs.
2. Gross it up for tax. To keep 48,000 at a 30% rate you need roughly 68,600 of profit, not 62,400 — because the tax is charged on the larger figure.
3. Add business costs, which are paid from revenue before profit.
4. Add the buffer for quiet months and equipment.
5. Divide by billable hours, not by hours worked. Working days per week, times weeks actually worked, times hours per day, times the billable share.

The stacked bar shows the result as a composition: of each hour you bill, how much is tax, how much is costs, and how much is genuinely yours. For most freelancers the take-home slice is between 40 and 55% — which is why a rate that sounds enormous next to a salary usually is not.

What the number is and is not

What comes out is a floor: the rate below which you are working at a loss against your own targets. It is not a market price. Two adjustments always apply on top:

• What the work is worth to the client. A rate that saves a client 200,000 is not priced from your costs. Value pricing sits above this floor, never below it.
• What the market pays. If the floor lands well above what your market will bear, that is not a signal to accept less — it is a signal that the target income, the billable share or the client segment has to change.

Use the floor to know when to say no. Use value to decide how far above it to price.

Two things worth doing with the result

Run it for the year you actually had. Put in last year's real costs and real billable hours. The rate it produces is what you should have charged; the gap against what you did charge is usually uncomfortable and always instructive.

Run it for a four-day week. Change working days from 5 to 4 and see the rate. People assume a four-day week is unaffordable; often it needs a 20–25% rate increase, which is a negotiation rather than an impossibility.

Frequently asked questions