Freelancer Rate Calculator
Calculate your real freelance hourly rate after taxes, expenses, and unbillable time. Find out what you actually need to charge.
Reverse Calculator
Already have a rate in mind? See what you'd actually take home.
How to Calculate Your Freelance Rate
The Basic Formula
Start with your desired take-home income, add taxes (self-employment + income), add business expenses, then divide by your actual billable hours. Most freelancers are surprised how high this number needs to be.
The Billable Hours Reality
You won't bill 40 hours a week. Admin, marketing, invoicing, proposals, and client communication eat up time. Most freelancers bill 50-70% of their working hours. New freelancers often start at 40-50%.
Self-Employment Tax
In the US, you pay 15.3% self-employment tax (12.4% Social Security + 2.9% Medicare). Employees only pay half because employers cover the rest. As a freelancer, you pay both halves.
Common Freelance Expenses
Health Insurance
Individual health insurance typically costs $400-800/month ($4,800-9,600/year) in the US. This is often the biggest expense freelancers forget to account for when leaving a job with benefits.
Software & Equipment
Professional software subscriptions, computer upgrades, and tools add up. Budget $1,000-3,000/year depending on your field. Developers might spend more on hardware; designers on software.
Retirement Savings
No employer 401(k) match means you're responsible for retirement. Consider adding 10-15% of your target income to expenses to fund a SEP IRA or Solo 401(k).
Frequently Asked Questions
What is a realistic billable hours percentage for freelancers?
Most freelancers can only bill 50-70% of their work hours. The rest goes to admin tasks, marketing, invoicing, client communication, and finding new work. New freelancers often start around 40-50%, while established ones with steady clients might reach 70-80%. If you're just starting out, use 50% to be safe.
What is self-employment tax and why does it matter?
In the US, self-employment tax is 15.3% of your net self-employment income. This covers Social Security (12.4%) and Medicare (2.9%). Employees only pay half because employers pay the other half, but freelancers pay both portions. This is separate from income tax and catches many new freelancers off guard.
How do I convert an employee salary to a freelance rate?
To match a $60,000/year employee salary as a freelancer, you typically need to charge 30-50% more per hour. This accounts for self-employment taxes, no employer benefits (health insurance, 401k match), no paid time off, and unbillable hours. A $30/hour employee job often equals $45-55/hour freelance to take home the same amount.
Did you know?
- Freelancers should pay quarterly estimated taxes to avoid penalties. The IRS expects you to pay as you earn, not just once a year.
- Set aside 25-30% of each payment for taxes, and pay estimated taxes in April, June, September, and January.
- The average freelancer undercharges by 20-30% in their first year because they forget about taxes and unbillable time.
- Full-time employees actually cost employers 1.25-1.4x their salary when benefits are included.
- Only about 50% of freelance income typically makes it to your pocket after taxes and expenses.