Freelance Rate Calculator: What Should You Charge?
Calculate your minimum freelance hourly rate based on target income, overhead costs, and realistic billable hours. Stop undercharging.
When to use this tool:
- Set minimum project rates
- Account for unpaid time
- Calculate safety buffer
How it's Calculated
- Effective Revenue = Target Salary + Overhead Buffer
- Required Hourly Rate = Effective Revenue / (Billable Hours per Week × Weeks Worked)
Key Assumptions
- Assumes business expenses and extra taxes are handled via the strictly added overhead percentage.
- Day rate assumes a standard 8-hour billable day.
Actionable Insights
- Many overestimate billability. 60-70% utilization is often more realistic than 90% when accounting for sales and admin.
- Add a strict buffer for pensions, health insurance, and sick days (often 20-35%).
- Shorter contracts and higher risk require a considerably higher base rate to cover the 'bench time'.
Frequently Asked Questions
Billable hours are what you actually charge the client for. Non-billable hours include sales, invoicing, meetings, and administration that you must do but cannot invoice.
Because you will need to take vacations, observe public holidays, and take sick days. 46-48 weeks is a much safer planning metric for freelancers.
You must include self-employment taxes, healthcare premiums, retirement contributions, software licenses, and liability insurance that an employer would typically cover.
Add the value of the employer's benefits (pension match, bonuses, paid time off) to the base salary offer before comparing it against your required freelance revenue.
Because your employer covers non-billable time, taxes, software, healthcare, and assumes the financial risk of no-work periods. You must charge a premium to absorb these costs.
This tool helps establish your baseline value per hour. You can use this minimum baseline to accurately price flat-fee projects by estimating the total hours it will take.
Short Answer: What should my freelance rate be?
Take your target annual income, add 25-35% for overhead, then divide by your realistic billable hours (not 2,000 — more like 1,000-1,200). If you want to take home $100k, you likely need to charge $85-$115/hour depending on your utilization rate.
The Freelance Rate Formula
What Goes Into Overhead?
| Expense | Typical Range | % of Gross |
|---|---|---|
| Self-Employment Tax | $10k-$20k/year | ~15% |
| Health Insurance | $6k-$18k/year | 5-10% |
| Retirement (401k equiv) | $5k-$15k/year | 3-8% |
| Software & Tools | $1k-$5k/year | 1-3% |
Common Mistakes
- Assuming 40 billable hours/week: After meetings, invoicing, sales, and admin, most freelancers bill 20-30 hours per week. Price accordingly.
- Setting overhead to 0%: This means you are paying for your own health insurance and taxes out of what you think is "profit." Always add 25-35%.
- Matching your old W-2 hourly rate: Your employer was paying an additional 30-50% on top of your salary for benefits, taxes, and overhead. Match the total cost, not just the paycheck.
Related Tools & Guides
- Contractor vs Employee: See if your calculated rate actually beats a salaried job.
- Freelance Risk Calculator: Check if your savings runway supports going freelance.
- Guide: How to price freelance risk correctly