Freelance Rate
Calculator
Work back from the income you want to the rate you have to charge, with your real business costs and the days you can honestly expect to bill.
01What you need to earn
For yourself, before tax
Software, insurance, kit, accountant
On top, for reinvestment and risk
After holiday and public holidays
Utilisation is the share of working days you actually bill. Selling, admin, invoicing and learning are all paid for out of the days you do bill, which is why a freelance rate is not a salary divided by 2,080. Seventy percent is a realistic figure for established freelancers; new ones are often nearer fifty.
$559.01 a day·161 billable days a year
| Income you want to take home | $80,000 | |
|---|---|---|
| Business costs for the year | $10,000 | |
| Revenue you have to bill | $90,000 | |
| Billable days a year | 161 days | |
| Days that earn nothing | 69 days | |
| Billable hours a year | 1288 h | |
| Day rate | $559.01 | |
| Hourly rate | $69.88 |
This tool performs arithmetic only. It is not financial, tax, or legal advice. How these calculators are built and checked.
Rate is an output, not a guess
A freelance rate calculator and a contractor calculator answer the same question in reverse: not what is my time worth, but what must I charge for the year to work.
What you need
The income you want plus the costs of running the business, plus a margin if you want reserves. This is the revenue the year has to produce.
What you can bill
Working days multiplied by utilisation. The non-billable days do not disappear — they get paid for out of the billable ones.
The rate that follows
Revenue divided by billable hours. Change utilisation by ten points and watch the rate move; that sensitivity is the whole point.
The 2,080-hour mistake
The most expensive error in freelancing is dividing a target income by 2,080 hours. It assumes fifty-two paid weeks, every hour billable, no unpaid gaps, and no costs. Someone wanting $80,000 arrives at $38 an hour, quotes it, wins work, and discovers around month nine that the year does not close.
The honest version subtracts the days you cannot bill before it divides. The same $80,000, with $10,000 of costs and 70% utilisation across 230 working days, needs about $70 an hour — nearly double. That is not greed, it is the same annual income with the unbillable time and the costs put back in where they belong.
Frequently asked questions
How do I work out my freelance rate?
Start from what you want to earn, add your business costs, add a margin if you want one, then divide by the hours you can realistically bill. The last step is where most people go wrong: dividing by 2,080 hours assumes every working hour is billable, and none of them are.
What is utilisation and why does it matter so much?
It is the share of your working days you actually bill for. Selling, invoicing, admin, and learning all take days you cannot charge for, and they have to be paid out of the days you can. At 70% utilisation, 230 working days become 161 billable ones — so your rate has to carry 69 unpaid days.
What utilisation should I assume?
Seventy percent is a reasonable planning figure for an established freelancer with steady work. Fifty is more honest for a first year, when finding clients takes most of the time. Set it low and you will be pleasantly wrong; set it at ninety and you will be quoting a rate that cannot cover your year.
Why is a contractor rate higher than the equivalent salary?
Because it has to cover things an employer would otherwise pay for: holiday, sick days, pension, equipment, insurance, and the gaps between contracts. A contractor calculator that simply converts a salary to an hourly rate ignores all of that, which is how people end up taking a large effective pay cut while thinking they got a raise.
Should I charge by the hour or by the day?
Both figures are shown because clients ask for different ones. Day rates suit longer engagements and are easier to plan against; hourly suits fragmented work. Whichever you quote, derive it from the same annual arithmetic so the two are consistent — quoting a day rate that is not eight times your hourly rate invites an awkward question.
Does this include tax?
No. The target income figure is what you want the business to pay you before tax, and tax comes out of it afterwards. Rates and structures vary enormously by country and how you are set up, so this calculator deliberately stops at gross. Speak to an accountant about what to set aside.
Should I add a profit margin on top?
It is worth considering. A margin above your income and costs is what funds slow quarters, equipment replacement, and eventually not working. Treating your target income as the ceiling rather than the floor is a common reason freelance businesses never build any reserve.
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