Freelance Rate Calculator
Work backwards from the income you want to the hourly rate you need — accounting for taxes, business expenses, and the hours you can realistically bill.
Software, hardware, insurance, coworking
Income + self-employment tax combined
Most freelancers bill only 50–70% of a 40h week
Allows ~4 wks vacation + 2 wks sick/admin
Required hourly rate
$103/hr
Day rate (8h)
$824
Week rate (25h)
$2,575
- Gross revenue needed
- $117,333
- Taxes (25%)
- − $29,333
- Business expenses
- − $8,000
- Take-home income
- $80,000
Rates assume every billable hour is captured — untracked time silently lowers your real rate.
Charge for every hour you actually work
A rate is only as good as the hours behind it. Chronoid captures all your billable time automatically — every app, site, and document — and shows your true billable ratio, so untracked work never quietly discounts your rate again.
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The freelance rate formula, explained
The formula works backwards from what you want to keep. First, add your target take-home income to your annual business expenses — that is what your business must clear after taxes. Then divide by (1 − tax rate) to find the gross revenue you need to invoice, because taxes come off the top. Finally, divide by your real billable hours for the year.
With the defaults: you want $80,000 take-home and spend $8,000 a year on software, hardware, insurance, and coworking. At a 25% effective tax rate, you need ($80,000 + $8,000) ÷ 0.75 = about $117,333 in gross revenue. Billing 25 hours a week for 46 weeks gives 1,150 billable hours a year — so your minimum rate is $117,333 ÷ 1,150 ≈ $103 per hour. Notice how far that is from the $38/hour a naive $80k ÷ 2,080-hour salary conversion would suggest.
Why freelancers undercharge
Most undercharging comes from two invisible leaks. The first is non-billable time: proposals, calls, bookkeeping, marketing, and email are real work, but nobody pays for them. If you assume a 40-hour billable week when you really bill 25, every rate you quote is roughly 40% too low before you even start.
The second leak is untracked billable time — the quick fixes, the “one small question” replies, the fifteen minutes here and there that never make it onto an invoice. Studies of freelancers consistently find hours of billable work lost each week to memory-based time tracking. This is where automatic tracking pays for itself: Chronoid records everything you work on locally on your Mac, so you can see your actual billable percentage and invoice every hour you really spent — no timers to remember, nothing leaking away.
Frequently Asked Questions
- How do I calculate my freelance hourly rate?
- Start with the take-home income you want, add your annual business expenses, then divide by (1 − your effective tax rate) to get the gross revenue you need to invoice. Finally, divide that gross figure by your real billable hours per year (billable hours per week × weeks worked). For example: ($80,000 + $8,000) ÷ (1 − 0.25) = $117,333 gross, divided by 25 h/week × 46 weeks = 1,150 hours, which works out to about $103/hour.
- Why can't I just convert my old salary to an hourly rate?
- Because an employer was quietly paying for things you now cover yourself: payroll taxes, health insurance, equipment, software, vacation, and — biggest of all — your non-billable time. As a freelancer, marketing, admin, proposals, and invoicing can eat 30–50% of your week, and no one pays for those hours. That is why the common rule of thumb is to charge 1.5–2× your old salary-equivalent hourly rate just to break even.
- What tax rate should I use in this calculator?
- Use your effective (average) combined rate, not your top marginal bracket. For US freelancers that means federal income tax, state income tax, and the 15.3% self-employment tax on net earnings — typically landing between 20% and 35% combined depending on income and state. The 25% default is a reasonable starting point; check last year's return or ask an accountant for your actual number.
- How many billable hours per week is realistic for a freelancer?
- Far fewer than 40. Between finding clients, writing proposals, emails, admin, and invoicing, most full-time freelancers only bill 20–30 hours per week — roughly 50–70% of their working time. Planning around 25 billable hours is realistic; assuming 40 will leave you undercharging by 30% or more.
- How do I know my actual billable percentage?
- Track it. Chronoid automatically records every app, website, and document you work in on your Mac, so you can see exactly how your work time splits between billable client projects and everything else — no manual timers to remember. Once you know your true billable ratio, you can set a rate based on reality instead of guesswork.