Freelance Hourly Rate Calculator

How this is calculated

⚠️ THE MISTAKE IS DIVIDING A SALARY BY 2,080 AND CALLING IT A RATE. That figure assumes every working hour is paid, that holiday and sick leave are free, that an employer is covering half your contributions, and that the business costs you nothing. None of those survive going freelance, and each one multiplies the rate you need. THERE ARE FOUR SEPARATE MULTIPLIERS AND THEY COMPOUND: · WEEKS YOU DO NOT WORK. Holiday, illness and the quiet fortnight nobody plans for. A salaried year is 52 paid weeks; a freelance year is whatever you actually invoice. · HOURS YOU CANNOT BILL. Admin, quoting, chasing payment, marketing, bookkeeping, learning. This is the big one and it is chronically underestimated. · TAX AND CONTRIBUTIONS you now pay in full, often including the employer's share. · BUSINESS EXPENSES - software, insurance, equipment, accountant, workspace. ⚠️ THE BILLABLE PERCENTAGE IS THE INPUT THAT DOMINATES EVERYTHING. On the defaults, moving from 60% billable to 100% would drop the required rate from about $83 to about $50. Almost nobody achieves anything close to 100% - 50 to 70% is a realistic band for most independent work, and someone who has never measured it will guess high. Track a fortnight honestly before trusting your estimate. THIS WORKS BACKWARDS FROM WHAT YOU NEED, WHICH IS NOT THE SAME AS WHAT THE MARKET PAYS. If the rate that comes out is above what clients in your field will pay, that is genuinely useful information - but the answer is not to quietly accept less and hope. It is to change one of the inputs: bill more hours, cut costs, work more weeks, or need less. A rate set below this figure is a decision to subsidise the work from somewhere, and it is better made deliberately than discovered a year later. TAX IS A SINGLE PERCENTAGE HERE AND REAL TAX IS NOT. Rates are banded, thresholds move, and what counts as a deductible expense varies enormously by country and structure. The figure to enter is roughly what you set aside from every invoice - and if you do not know it, that is the first thing to establish with an accountant rather than the thing to guess. GENERAL INFORMATION, NOT FINANCIAL ADVICE. Pricing, tax and business structure interact in ways no calculator sees. For anything material, talk to a qualified adviser or accountant.

Common questions

Why is the rate so much higher than my old salary per hour?

Because four separate things multiply it, and they compound. You lose the weeks you do not work — a salaried year is 52 paid weeks and a freelance year is whatever you invoice. You lose the hours you cannot bill, which is admin, quoting, chasing payment, marketing and bookkeeping. You pay tax and contributions in full rather than sharing them with an employer. And you carry business costs that were previously invisible. On the defaults those combine to make the required rate nearly three times the salary-divided-by-2080 figure, which is why that figure is such a damaging place to start.

Which input matters most?

The billable percentage, by a distance. On the defaults, moving from 60% billable to 100% would drop the required rate from about $83 to about $50 — a bigger swing than any of the other inputs produces. It is also the one people get most wrong, because unbillable work does not feel like work until you count it. Almost nobody achieves anything close to 100%; 50 to 70% is a realistic band for most independent work. Track a fortnight honestly before trusting your own estimate, because the guess is nearly always optimistic.

What if the market will not pay that rate?

Then that is genuinely useful information, and the wrong response is to quietly accept less and hope it works out. The right response is to change one of the inputs deliberately: bill a higher share of your hours, cut business costs, work more weeks, or need less income. Any of those is a real decision with real consequences. Charging below this figure is a decision to subsidise the work from savings, a partner, or your own unpaid time — which is sometimes reasonable for a while, and is much better made knowingly than discovered a year later.

Should the target be before or after tax?

After — it is what you actually need to live on, and the tool grosses it up. That is the more useful direction because you know what you need to take home far more precisely than you know what you need to invoice. The tax percentage is what you set aside from each invoice, and if you do not know that figure the honest answer is that establishing it with an accountant is the first thing to do rather than the thing to guess. Getting it wrong does not show up until a tax bill arrives, by which point the money has usually been spent.

Is a single tax percentage realistic?

It is a simplification and the article is upfront about it. Real tax is banded, thresholds move, business structure changes everything, and what counts as a deductible expense varies enormously by country. What a single percentage does capture correctly is the shape of the problem — that you must invoice meaningfully more than you take home, and that the gap grows with income. Use roughly what you actually set aside. If your effective rate is very different at the top of your range, run the tool twice and treat the answers as a band.

What about the day rate?

It is the hourly figure times eight billable hours, and the caveat is in that word. A working day is rarely eight BILLABLE hours — if your billable share is 60%, a normal day contains under five, so a day rate priced as eight billable hours is a day rate you cannot deliver at that price every day. Many freelancers price days deliberately higher than eight times their hourly rate for exactly this reason, and others use the day rate only for work that genuinely occupies a full day. Either is defensible; assuming eight billable hours in a day is not.

Does this include a pension or savings?

Only if you put them in the target. An employer pension contribution is one of the least visible things you lose going freelance, and it does not appear anywhere unless you add it — so if you want to save at a similar rate, increase the take-home target by that amount before reading the answer. The same applies to the buffer you now need for illness, equipment failure and gaps between contracts. Neither is optional in practice, and both are invisible in a naive rate calculation.

Take it further with AI

Copy this into ChatGPT or Claude with your own numbers filled in. It hands over the figures this calculator worked out, so the answer is built on real arithmetic instead of a guess.

I used the Freelance Hourly Rate Calculator at https://www.bfcbrilliance.com/tools/freelance-hourly-rate-calculator.

What I entered:
- What you need to take home a year ($): ___
- Weeks you will actually work (weeks): ___
- Hours you work in a week (h): ___
- Share of those hours you can bill (%): ___
- Business costs a year ($): ___
- What you set aside for tax (%): ___

What it calculated:
- The rate you need to charge: ___
- Salary ÷ 2,080, for comparison: ___
- How many times that your real rate is: ___
- Billable hours in your year: ___
- Hours you work but cannot bill: ___

Use those figures as given — they are already worked out, so please don't recalculate or estimate your own. Help me turn them into a plan: what to buy or do, in what order, roughly what it should cost, and the mistakes people most often make with this job.

Keep this general and do not give financial advice — flag where I should talk to a qualified adviser.

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