Calculate Your Freelance Hourly Rate
Set profitable freelance rates based on your target income, expenses, billable hours, and taxes.
Why Freelancers Undercharge
Most freelancers set rates based on what they earned as employees — but employees get benefits (health insurance: $6,000-15,000/year), employer FICA match (7.65%), paid vacation (2-4 weeks), equipment, and overhead paid by the employer. To match an $80,000 salary, a freelancer needs to bill approximately $130,000-145,000 gross after taxes, self-employment tax, benefits, and expenses. That's 60-80% more than the salary number.
The Billable Hours Reality
Freelancers do NOT bill 40 hours/week. Between sales, marketing, admin, invoicing, and non-billable work, most freelancers bill 25-32 hours per week out of 40-50 hours worked. Using 40 billable hours in your rate calculation guarantees you'll fall short of your income target. Be realistic: 30 billable hours/week is a good planning number for established freelancers.
The #1 pricing mistake freelancers make: pricing based on what they think the client will pay instead of what they need to earn. Calculate your minimum rate from your financial needs FIRST, then only take clients who can pay that rate. Discounting your rate to win work is a race to the bottom that leads to burnout and financial stress.
