Freelance Rate Calculator
Work backwards from the money you need to keep. Unbillable hours, business expenses, time off and tax all come out before you do — which is why the rate that actually reaches your target is roughly three times the one you get by dividing a salary by 2,080.
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Dividing the salary you want by 2,080 hours gives a number that cannot pay you, because it counts hours you will never bill and ignores the costs an employer used to absorb. This freelance rate calculator works from what you need to keep, backwards.
What you want left after tax, per year.
Software, insurance, accountant, hardware.
Income plus self-employment tax.
Holiday and sickness. Nobody pays you for these.
Everything, not just client work.
Of those hours, how many you can invoice.
Dividing $100,000 by 2,080 hours suggests $48.08 an hour. The rate that actually gets you there is $140.27 — 2.9× higher. The difference is 736 hrs you work without invoicing, $12,000 of costs, and the tax nobody withholds for you any more.
Work backwards from an offer
$68,880 a year after expenses and tax — $31,120 short of your target.
Rates go up when you can deliver more per billable hour. If you are building software largely on your own, Tekk turns what you want into specs your coding agent can actually execute.
Work backwards, not forwards
revenue needed = target take-home ÷ (1 − tax rate) + business expenses
hourly rate = revenue needed ÷ billable hours
The order matters. Almost everyone starts from a rate and hopes the year works out. Starting from what the year has to produce is the only version that arrives at a number you can defend.
Worked example
A target of $100,000 in the bank, $12,000 of business costs, a 30% effective tax rate, six weeks off, forty hours a week, sixty per cent of them billable.
| Step | Working | Result |
|---|---|---|
| Working weeks | 52 − 6 | 46 |
| Hours worked | 46 × 40 | 1,840 |
| Billable hours | 1,840 × 60% | 1,104 |
| Unbillable hours | 1,840 − 1,104 | 736 |
| Gross income needed | $100,000 ÷ 0.7 | $142,857 |
| Revenue needed | + $12,000 costs | $154,857 |
| Hourly rate | $154,857 ÷ 1,104 | $140.27 |
| Day rate | × 8 hours | $1,122 |
The number people use instead
$100,000 ÷ 2,080 hours = $48.08
That is 2.9 times too low, and it is the single most common pricing mistake independent workers make. It comes apart in three places:
- 736 hours you work but cannot invoice. Proposals, admin, sales calls, invoicing, the revision you did not charge for. Sixty per cent utilisation is normal, not lazy.
- $12,000 an employer used to pay. Software, insurance, hardware, an accountant. None of it appeared on your payslip because none of it was yours.
- Tax nobody withholds. The salary figure was already net of it. Your invoice is not.
Each factor alone would be a modest correction. Together they multiply.
The rate is a floor, not a price
What comes out of this is the point at which the year breaks even against the life you want. It contains no profit above your own salary, no buffer for a quarter where work dries up, and no premium for being good at something rare.
So treat it as the line below which you are subsidising the client, and set the actual price on what the work is worth to them. Those two numbers are rarely close, and the gap is where a freelance business either works or does not.
Why 2,080 and not 2,087
A pedantic note that turns out to matter less than it sounds.
The US Office of Personnel Management divides by 2,087, not 2,080, because the Gregorian calendar repeats on a 28-year cycle of exactly 1,461 weeks — 7,305 workdays, or 260.89 a year, or 2,087.14 hours.
2,080 is used on this page because it is what people reach for. The seven-hour difference changes the naive rate by about sixteen cents. The 736 unbillable hours change it by ninety dollars.
How it works
- 1
Start from take-home, not revenue
Enter what you want left after tax, then the annual cost of being in business — software, insurance, an accountant, hardware. This freelance rate calculator grosses the target up for tax and adds the costs on top, because both come out of what you bill before any of it reaches you.
- 2
Be honest about billable hours
Weeks off, hours worked per week, and the share of those hours you can actually invoice. Sales calls, admin, proposals and the work you redo for free are not billable. Sixty per cent is a realistic figure for most solo operators and the default here.
- 3
Compare it to the naive number
The tool shows the rate you would get from dividing your target by 2,080 hours alongside the one that works. The gap between them is what people mean when they say freelancers undercharge — it is not a confidence problem, it is an arithmetic one.
Frequently asked questions
- How do I calculate my freelance hourly rate?
- Take the income you want after tax, divide by one minus your tax rate, add your annual business expenses, then divide by the hours you can genuinely bill. On the defaults above that is $100,000 ÷ 0.7 plus $12,000, over 1,104 billable hours, which comes to $140.27 an hour.
- Why is dividing my old salary by 2,080 wrong?
- Because 2,080 is 40 hours times 52 weeks — every hour of the year, all of them paid, none of them spent on admin, and your employer covering software, equipment, holiday, sick pay and half your payroll tax. As a freelance hourly rate calculator that division is wrong three times over, and always in the direction of charging too little.
- What billable percentage should I use?
- Sixty per cent is a reasonable planning figure for an established solo operator. Below fifty means the business is spending more time selling and administering than delivering. Anyone claiming ninety is either not counting proposals and invoicing or is about to burn out.
- Should I quote an hourly rate or a day rate?
- A day rate for anything longer than a few hours. It removes the argument about whether a coffee counts, and it prices the disruption of context-switching rather than the clock. The day rate here is simply the freelance hourly rate calculator figure above times eight billable hours.
- What tax rate should I enter?
- Income tax plus self-employment or national insurance contributions, combined. In the US that often lands somewhere between 25% and 40% once federal, state and the full 15.3% self-employment tax are counted. Ask your accountant for your actual effective rate — this freelance rate calculator will only ever be as good as that number.
- What counts as a business expense?
- Anything you now pay that an employer used to: software subscriptions, hardware, professional insurance, an accountant, a co-working desk, training, and the phone and internet share you use for work. It adds up faster than people expect, which is why it sits above the tax line here.
- Should I charge more than this?
- This freelance rate calculator gives the floor, not the price. It is the rate at which the year works out — it contains no profit above your salary, no buffer for a slow quarter, and no premium for scarce expertise. Treat it as the number below which you are subsidising the client, then price on value from there.
- Is a freelance pricing calculator the same as pricing by value?
- No, and they answer different questions. A freelance pricing calculator like this one tells you what you must earn to stay solvent. Value pricing asks what the outcome is worth to the client, which is often far more. Use the first as a floor and the second to set the actual number.
- How do I handle a rate someone has already offered?
- Use the panel below the results. It takes an offered hourly rate and applies your real billable hours, expenses and tax to show what it leaves for the year. A rate that sounds generous per hour often turns out to be well short of the target once the unbillable time is counted.
- Does this work for a day rate contract or retainer?
- Yes, with one adjustment. If a contract is genuinely full-time for its duration, your billable share for those weeks is close to 100%, so raise the figure and the required rate falls. Retainers with guaranteed hours are the reason experienced contractors quote lower rates for longer bookings.
- Why is 2,080 used rather than 2,087?
- Because 2,080 is the number people actually divide by, and showing what it costs is the point. The US Office of Personnel Management uses 2,087, derived from the fact that the calendar repeats on a 28-year cycle averaging 260.89 workdays a year. The seven-hour difference is irrelevant next to the effect of unbillable time.
- Do you store the numbers I enter?
- No. The calculation runs entirely in your browser. Nothing is sent to a server, nothing is logged, and there is no account. Disconnect from the internet and it will still work — which seems worth saying about a page where you type your target income.
- Why is this free, and what is Tekk?
- Tekk is a spec-driven development platform for people building software with AI coding agents. This calculator costs us nothing to run, and independent builders working out what to charge are the people we build for. No signup, no run limit, no upsell inside the tool.
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