Plug in your target salary, business overhead, and how much of your working week you actually bill. Get the hourly, daily, and project rate you need to charge to hit your number.
Taxes, insurance, software, office, etc.
52 − vacation − sick days
Of 40 working hours, 25–30 is typical
For fixed-fee projects, consider charging 1.3–2× the time-based rate to capture value vs effort.
Why most freelancers undercharge
They divide their old salary by 40 hours × 52 weeks. That ignores overhead, taxes, unbilled time, and profit. The real hourly rate is typically 2–3× the naive number.
Utilization is the lever
Bumping billable hours from 25 to 30/week (with the same salary target) drops your required rate by 17%. If you can fill the calendar, you can charge less and earn more. If you can't, you need to charge more.
Hourly vs project
Hourly caps your earnings at time. Project rates let you charge for value. Use this hourly rate as your floor, then mark up 1.3–2× for fixed-fee work to reward your speed and absorb scope risk.
The right hourly rate covers your target salary + business overhead + profit margin, divided by your billable hours per year. Annual revenue needed = (salary + overhead) ÷ (1 − profit margin). Then divide by billable hours = weeks worked × billable hours per week. Most freelancers only bill 50–70% of their working hours — the rest is admin, sales, learning, and breaks.
For freelancers and small consultancies, 15–25% profit margin is healthy. This isn't your salary — it's the extra cushion above all costs that funds growth, retirement, downturns, and reinvestment. Agencies typically aim for 20–30%. Operating at break-even with no margin is risky long-term.
Even at full-time (40h/week), most freelancers only bill 25–30 hours. The remaining 10–15 hours go to sales calls, proposals, invoicing, professional development, and unbilled internal work. New freelancers often bill less (20–25); senior consultants with retained clients can sometimes hit 30–35.
Common freelancer overhead: business taxes (often 15–25% of revenue in US), self-employment retirement contributions, health insurance, professional liability insurance, software subscriptions, accounting/legal fees, equipment depreciation, co-working space, continuing education. A solo freelancer typically has $10K–$30K of annual overhead; agencies have much more.
Hourly is simpler but caps earnings at time. Project (fixed) rates let you charge for value — a skilled freelancer who finishes faster makes more, not less. Use this calculator to find your true hourly cost, then price projects at 1.3–2× that cost based on value, risk, and your negotiating position.
No. This calculator runs entirely in your browser. None of your salary or business data is sent to any server.
Get an email when we ship the next pricing, invoicing, or contract tool.
No spam, no signup needed to use any tool. Unsubscribe any time.