Freelance rate calculator
How to calculate a sustainable freelance rate — the formula, what to include, worked examples, and common pricing mistakes. The freelance rate formula: take your target annual income, add your estimated annual business expenses (software, equipment, insurance, marketing), divide by the number of billable hours you can realistically work per year, and apply a self-employment tax buffer of 25–30%. The result is your minimum viable hourly rate. What to include in your rate: target take-home income, self-employment taxes (typically 25–30% of net income), health insurance or other benefits you pay yourself, software and tools (design apps, project management, accounting), equipment amortization, marketing and professional development, and a buffer for non-billable time (admin, sales, sick days). Billable hour reality: most freelancers are billable for 60–70% of working hours at most. A 40-hour work week typically produces 25–28 billable hours once you account for admin, sales, and communication. Common pricing mistakes: setting a rate based purely on market comparisons without accounting for expenses and taxes, underestimating non-billable time, and not reviewing your rate annually as your costs and experience grow. Project pricing: once you know your hourly rate, you can estimate project fees by multiplying your hourly rate by your expected hours — then add a buffer for scope uncertainty. Project pricing is typically more profitable than hourly billing because it rewards efficiency.