How to use the freelance rate calculator
- Enter the take-home pay you want each year, as if it were a salary.
- Add your business expenses: software, equipment, insurance, health plan, coworking, accounting.
- Set your tax set-aside, hours per week, weeks off and the share of hours you can bill.
How billable hours change the rate
Same income goal, 40 hours a week, 6 weeks off:
| Billable share | Billable hours a year | Minimum hourly rate |
|---|---|---|
| 50% | 920 | $117.75 |
| 60% | 1,104 | $98.13 |
| 70% | 1,288 | $84.11 |
| 80% | 1,472 | $73.60 |
The fewer hours you can bill, the higher your rate must be. Many new freelancers set rates for 100% billable time and wonder why the money runs short.
Why freelance rates are higher than salary ÷ 2,080
A $70,000 salary is about $34 an hour over 2,080 hours. As a freelancer you also cover:
- both halves of Social Security and Medicare (self-employment tax);
- health insurance, retirement savings and equipment;
- unpaid time off: vacations, holidays, sick days;
- non-billable work: sales, admin, invoicing, learning.
That's why freelance rates are often two to three times the equivalent salary per hour.
From floor to price
The calculator gives your floor, the least you can charge and still hit your goals. Your actual price should also reflect:
- what clients pay for your skills and results;
- your experience and specialty;
- the value of the project to the client.
Raise rates for new clients first, and review them every year.
Taxes and paying yourself
Set aside tax from every payment and pay quarterly: the 1099 tax calculator works out the amount, and our guide to quarterly estimated taxes explains the dates and rules. Earning well? An S corp election can lower self-employment tax; see the S corp tax calculator. For a steady paycheck from irregular income, read how to pay yourself as a small business owner.
Run your freelance business on numbers
Till is a small business profit planner that splits every payment into costs, a tax set-aside and your own pay, and shows what you can safely pay yourself each month. Try the free demo with a sample business.
An estimate to help set prices; not tax advice.
Frequently asked questions
How do I calculate my freelance hourly rate?
Why can't I just use my old salary divided by 2,080?
What share of my time is billable?
How much should I set aside for taxes?
Should I charge hourly or per project?
What is a good day rate?
Written by
Finance Specialist & Editor, VaultlyApps
Emma Whitfield writes and edits the VaultlyApps money guides and free calculators. Her focus is US household finance — budgeting on a real paycheck, paying down credit card and student debt, emergency funds and savings goals, renting — and the money side of freelancing and small-business income, from pricing and profit margins to self-employment tax. Every guide is researched against primary sources such as IRS publications and the CFPB, every number is checked in our tested calculators, and tax content is reviewed each year when new IRS figures come out. Emma is not a licensed financial adviser or tax preparer; her work is general education, not personal advice.
Researched against primary US sources, checked against independent calculators and reviewed by a finance expert on our team. Written for US readers — general education, not financial, tax or legal advice. Editorial policy · Disclaimer
