Freelance Rate Calculator
Calculate your ideal hourly rate to cover your income goals, expenses, taxes, and profit margin. Stop undercharging for your work.
Income Goal
This is what you want to earn after expenses and taxes
Business Expenses
Tax Reserve
Include self-employment tax (~15.3%) plus income tax. US freelancers typically set aside 25-35%.
Time & Availability
Time spent on admin, marketing, and unbilled work. Most freelancers are 50-70% billable.
Profit Margin
Buffer for savings, growth, and slow periods. 10-20% is typical.
Your Rates
Recommended Hourly Rate
$115
per hour
Annual Summary
Pro Tip: These are minimums. Charge more for rush work, specialized skills, or high-value projects. Your rate is a starting point, not a ceiling.
Rate Context
How to Calculate Your Freelance Rate
The Formula Behind the Calculator
Calculating your freelance rate isn't as simple as dividing your desired salary by hours worked. As a freelancer, you have expenses and non-billable time that employees don't worry about.
Hourly Rate = (Annual Income Target + Annual Expenses + Tax Reserve) ÷ Billable Hours × (1 + Profit Margin)
What to Include in Your Calculations
1. Desired Annual Income
Start with how much you want to take home after everything is paid. Consider what you'd earn as an employee with similar skills, then add 20-30% since you're taking on additional risk and don't have employer benefits.
2. Business Expenses
As a freelancer, you pay for things employers typically cover:
- Health insurance ($300-800/month)
- Software subscriptions ($100-500/month)
- Equipment and hardware
- Co-working space or home office
- Professional development
- Accounting and legal fees
- Marketing and advertising
3. Taxes & Self-Employment Tax
In the US, freelancers pay self-employment tax (15.3%) plus income tax. Set aside 25-35% of gross income for taxes depending on your tax bracket.
4. Billable Hours
You can't bill for every hour you work. Between admin, marketing, and client communication, most freelancers are only 50-70% billable. From 2,080 potential work hours per year:
- Subtract vacation and sick days (2-4 weeks)
- Account for non-billable work (30-50%)
- Realistic billable hours: 1,000-1,500/year
5. Profit Margin
Don't just break even—build in profit for savings, growth, and unexpected circumstances. A 10-20% profit margin is standard.
Common Pricing Mistakes
- Using employee rates: Employees get benefits worth 20-40% of salary
- Assuming 40 billable hours/week: Most freelancers bill 20-30 hours
- Forgetting about taxes: Self-employment tax alone is 15.3%
- No profit margin: You need buffer for slow months and growth
- Not raising rates: Review and increase rates annually
When to Raise Your Rates
Consider raising your rates when:
- You're fully booked for 3+ months
- You haven't raised rates in a year
- Your skills have significantly improved
- You're turning down projects
- Industry rates have increased
Frequently Asked Questions
How do I know if my rate is too high or too low?
If you're winning every project, your rates are probably too low. If you're not winning any, they might be too high—or you need to better communicate your value. Aim for a 30-50% close rate on proposals.
Should I charge different rates for different clients?
Yes, value-based pricing is common. Enterprise clients often have bigger budgets and more complex needs. You can charge more for rush work, specialized expertise, or when the work provides significant value to the client.
What's better: hourly or project-based pricing?
Project-based pricing is often better for experienced freelancers—you can charge based on value rather than time. However, hourly works well for ongoing work or when scope is unclear. Many freelancers use hourly rates to estimate project fees.
How do I handle clients who say I'm too expensive?
Don't lower your rates—you'll attract clients who don't value quality. Instead, explain the value you provide, offer a smaller scope that fits their budget, or let them go. The right clients pay professional rates.
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