Freelance Rate Calculator
Calculate your ideal freelance hourly rate based on target income and expenses
About Freelance Pricing
Your freelance rate must cover taxes, benefits, expenses, and profit. Freelancers typically bill 60-70% of their work hours. Always factor in non-billable time for admin, marketing, and learning.
About This Tool
A sustainable freelance rate has to cover desired take-home plus self-employment overhead: SE tax (~15.3% on net earnings), health insurance, retirement contributions, software, and unbillable time (admin, sales, vacation). A reasonable model assumes 60–70% of working hours are billable.
The calculator works backward from target after-tax income through expenses and billable-hour assumptions to a defensible hourly rate.
The self-employment math has structural costs that W-2 employees don't see. Employer-side payroll taxes (7.65% Social Security + Medicare) become the freelancer's responsibility — that's the SE tax. Health insurance shifts from a partially-employer-paid benefit to the freelancer paying full premiums (typically $400–800/month per person, much more for families). Retirement contributions move from 401(k) match opportunities to SEP IRA or Solo 401(k) self-funding. Equipment, software subscriptions, professional development, and dedicated workspace are all out-of-pocket. The non-billable time sink — sales calls, proposal writing, invoicing, training, sick days — typically claims 30–40% of total working hours.
A worked example: target $120,000 take-home. Add 25% federal + state tax: pre-tax target $160,000. Add SE tax (~15% on net): roughly $185,000 of revenue needed. Add $12,000/year health insurance, $5,000 software/equipment, $4,000 professional development: $206,000 needed. Working 50 weeks at 40 hours = 2,000 hours, of which 65% billable = 1,300 billable hours. Required rate: $206,000 / 1,300 = $158/hour. The W-2 equivalent salary at this take-home is around $145,000 — the freelancer earns more revenue but ends with similar after-tax income because of the structural cost differences.
Limitations: the calculator's defaults are US-centric and approximate. Self-employed taxes vary by state and entity structure (sole proprietor vs. S-corp can shift the math significantly above $80–100k revenue). Health insurance costs vary widely by state, age, and dependents — California exchange premiums differ from Texas for the same plan tier. The 65% billable assumption is achievable for established freelancers; new freelancers often run 40–50% billable in their first year due to sales investment. Run the calculator for several scenarios (low/medium/high billable percentages) to see the range, not a single number.
The about text and FAQ on this page were drafted with AI assistance and reviewed by a member of the Coherence Daddy team before publishing. See our Content Policy for editorial standards.