Find the minimum rate you must charge to cover all expenses, taxes, and savings goals.
Your freelance rate needs to cover far more than your salaried equivalent because you bear costs that employers normally handle: self-employment tax (15.3% of net income), health insurance, retirement contributions, business expenses, and unpaid non-billable time (marketing, admin, invoicing). A common mistake is setting a freelance rate equal to a salaried hourly rate and then being surprised at how little remains after expenses.
Enter your target annual income (what you want to take home after all expenses), your estimated annual business expenses, your self-employment tax rate, weeks of vacation, and the percentage of work time that is billable (typically 60-70%). The calculator works backward to show the hourly rate you need to charge to achieve your income goal. Read our full guide on setting your freelance rate.
If your target take-home income is $75,000, you might think charging $45/hour (about $93,600 gross at 2,080 hours) covers it. But with self-employment tax ($14,300), health insurance ($6,000), retirement contributions ($7,500), business software and expenses ($3,000), and only 65% billable time, you actually need to charge $75-85/hour. The Salary to Hourly Calculator shows what your equivalent W-2 rate would be.
Most new freelancers undercharge because they base rates on their previous salary divided by 2,080 hours (52 weeks x 40 hours). This ignores the substantial costs of self-employment: self-employment tax (15.3% on the first $176,100, then 2.9% above), health insurance ($400 to $800/month individual), retirement contributions (no employer match), paid time off (none unless self-funded), administrative time (invoicing, marketing, bookkeeping average 15 to 25% of working hours), and business expenses (software, equipment, professional development). After accounting for these factors, a freelancer needs to charge roughly 2.0 to 2.5x the equivalent employee hourly rate to achieve the same net income. Value-based pricing (charging based on the value delivered to the client rather than hours worked) is the highest-earning freelance pricing model.