Freelance hourly rate calculator

Why your rate is not your salary divided by 2,080

The instinct when leaving a job is to take the salary you had, divide by the 2,080 hours in a working year, and quote that. It produces a number that will not sustain you, and the gap is not small — it is usually somewhere between double and triple.

Three things account for it.

1. You are not billable 40 hours a week

Employees are paid for every hour they are at work, including meetings, admin, training and the hour lost to a broken build. Freelancers are paid only for hours a client will accept on an invoice.

Everything else — finding work, writing proposals, chasing invoices, bookkeeping, email, your own admin — is unpaid, and it is a large fraction of the week. A sustainable, experienced freelancer with steady clients typically bills 25–30 hours a week. Someone still building a client base bills considerably less.

If you plan on 40 billable hours, you are planning to work 60 real ones. It is the single most common reason freelancers burn out in year two.

2. Nobody pays you for time off

A salaried job quietly includes paid holiday, public holidays and sick days. Take four weeks of holiday, ten public holidays and a week of illness and you have lost roughly six or seven weeks of earning — about 13% of the year — that an employee never notices.

That does not reduce your income needs. It just means fewer weeks in which to earn it.

3. You pay both halves of payroll tax

As an employee, your employer paid 7.65% of your wages in Social Security and Medicare, on top of your salary and invisible to you. Self-employed, you pay both sides — 15.3% of 92.35% of your profit.

They also paid for health insurance, a retirement match, equipment, software and a desk. None of that continues.

What this calculator does

It works backwards rather than forwards. You state the amount you want to actually keep, and it solves for the revenue that produces it after federal tax and expenses, then divides by the hours you can genuinely bill.

The tax step uses exactly the same calculation as our self-employment tax calculator — including self-employment tax, the deductible half of it, and the QBI deduction. There is no separate approximation, so the two tools cannot disagree.

The salary comparison

The figure at the bottom shows what a salaried job would have to pay to leave you equally well off. It is deliberately conservative: it accounts for the employer half of payroll tax and for paid time off, but not for health insurance, a retirement match, equipment or training.

Include those and the honest equivalent is higher still. It is a useful number to have in mind when a client suggests your rate seems high compared with a salary.

This is a floor, not a price

Everything here produces the rate you need to survive on your assumptions. It is a minimum, and it is the wrong number to quote.

What you can actually charge depends on the value of the work, what your market pays, your experience, and how badly the client needs it solved. Specialists routinely charge multiples of their break-even rate, and nobody has ever been harmed by discovering their floor is lower than their price.

Use it in the other direction: if a client's budget is below this line, you now know precisely what taking the work costs you.

What it leaves out

• State income tax — federal only. Add yours on top.
• Health insurance, which is a real and often large cost.
• Retirement saving beyond what you keep. If you want to put money into a solo 401(k), raise your target income accordingly.
• Non-payment and scope creep, both of which reduce effective hourly rate in ways no calculator can predict.

Each of those argues for charging more than the figure above, not less.