Freelance Rate Calculator: Price Your Services Correctly

Example

Input: $80k Goal, $10k Exp, 1000 Billable Hrs

Result: $90/hour Minimum

Step-by-Step Guide

1 Set Income Goal: Enter the annual take-home pay you desire.
2 Estimate Expenses: Sum up annual costs for software, hardware, office, and marketing.
3 Define Capacity: Input weeks off and hours spent on non-billable tasks (admin, sales).
4 Calculate Rate: The tool divides Total Need by Billable Hours.

What is Freelance Rate Calculator: Price Your Services Correctly?

The Freelance Rate Calculator is a vital pricing tool for independent contractors, consultants, and gig workers. Unlike traditional employees, freelancers must cover their own taxes, health insurance, software costs, and unpaid administrative time. This calculator reverse-engineers a sustainable hourly or project rate by starting with your desired annual income and factoring in overhead expenses and true billable capacity.

How it Works

The logic calculates the 'Gross Revenue Requirement' needed to match a target net salary. It starts with the Desired Annual Income, adds Business Expenses (software, insurance, equipment) and Tax Liability (Self-Employment Tax). It then divides this total revenue requirement by the number of 'Billable Hours' per year (Total Hours minus vacation, sick days, and admin time). The result is the minimum hourly rate you must charge to meet your financial goals.

FAQ

What is a billable hour?

Time spent working directly on client projects. It excludes emailing, invoicing, marketing, and learning.

What is a healthy billable ratio?

For most freelancers, 50-60% of total work time is billable. The rest is admin/sales.

Should I charge hourly or per project?

Project-based pricing is often better as you become faster/more efficient, but hourly is safer for undefined scopes.

How much tax should I add?

In the US, add ~15.3% for self-employment tax plus your income tax bracket. A 30% buffer is standard.

Does this include profit?

You should add a profit margin (10-20%) on top of the calculated rate for business growth/savings.

Conclusion

Underpricing is the most common mistake freelancers make. By accounting for non-billable time and overhead, this calculator protects your profitability. A rate that seems high ($100/hr) might actually net you a modest salary once taxes and unbilled hours are removed. Use this figure as your negotiation floor.

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References & Standards

This calculator uses formulas and data standards from Standard References to ensure accuracy.

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