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Freelancer Rate Calculator

The reason a freelance rate has to be two or three times an employee’s hourly wage is not margin.

Last updated Free, no sign-upHow it works

Your inputs
What you need to earn

Not hours worked. Most freelancers bill 20 to 30 in a 40 hour week once admin and finding work are counted.

Leave room for holiday and illness — nobody pays you for either.

The employer contribution you no longer receive and now fund yourself.

Business costs

Accounting, insurance, workspace, training, travel.

Results update as you type. Nothing you enter is sent anywhere or stored.

Hourly rate you need to charge: $108.47, an exact figure.

Hourly rate you need to charge

high confidence
$108.47To take home $85,000 after overhead and self-employment tax

Exact figure. This calculator has no modeled range — the number follows directly from your inputs.

What it is worked out from

  • Your take-home target$85,000
  • Business overhead$15,540
  • Self-employment tax$13,211
  • Retirement saving (10%)$8,500
  • Everything else$2,495
  • Same in every state
  • Assumptions 2026.07.1

Why high: this is exact arithmetic on your inputs and the published figures used, so there is no modeled range.

Key figures

Day rate (8 hours)
$867.80
Annual revenue you must invoice
$124,746
Billable hours a year
1,150 hours
Utilisation rate
6,250%Billable hours as a share of a 40 hour week. Above about 70% is unusual over a full year.
Overhead per billable hour
$13.51
Equivalent salaried hourly wage
$40.87The comparison salary over a standard 2,080 hour year.
Freelance rate as a multiple of that wage
2.7 ×

Cost breakdown

Estimated cost of each component, with low, typical, and high values.
ComponentLowTypicalHigh
Your take-home targetOther$85,000$85,000$85,000
Business overheadOtherInsurance $6,600, software $1,440, equipment $1,500, other $6,000.$15,540$15,540$15,540
Retirement saving (10%)OtherNobody matches this for you. It is the employer contribution you no longer receive.$8,500$8,500$8,500
Self-employment taxOther15.3% on 92.35% of net earnings — both halves of Social Security and Medicare, where an employee pays one.$13,211.13$13,211.13$13,211.13
Platform fees and unpaid invoicesOther0% commission and 2% of invoices never collected.$2,494.92$2,494.92$2,494.92
Hourly rate you need to charge$108.47$108.47$108.47

The rows above are the figures the hourly rate you need to charge is worked out from, not parts that add up to it.

What moved your estimate

  • Only 25 of 40 hours are billable — increases the estimate

    That is 63% utilisation, and it is why a freelance rate has to be well above an employee's hourly wage. The other hours are still work — finding clients, quoting, invoicing, admin, and chasing payment — they just have nobody to bill.

  • Against an equivalent salary

    A $85,000 salaried job pays about $40.87 an hour on a 2,080 hour year. Your freelance rate needs to be $108.47 — roughly 2.7 times that — to reach the same take-home. The gap is not greed: it is unbillable hours, the employer half of payroll tax, insurance you now buy yourself, and the retirement contribution nobody makes for you. Benefits alone average 30.0% of total compensation in private industry.

  • Some invoices will not be paid — increases the estimate

    Allowing for 2% of billings never being collected adds about $2,495 to what you need to invoice. Deposits up front and clear payment terms reduce it more reliably than raising the rate does.

How this number was produced
  1. What you need to clear$85,000 income + $8,500 retirement + $15,540 overhead + $13,211 tax$122,251
  2. Grossed up for fees and bad debt$122,251 ÷ 0.980$124,746
  3. Billable hours25 hr/wk × 46 wk1,150 hr
  4. Hourly rate$124,746 ÷ 1,150 hr$108.47

Adjustments applied

  • Utilisation×1.60

    25 billable hours in a 40 hour week means each one carries the cost of 1.6 hours of your time.

  • Self-employment tax×1.14

    Both halves of Social Security and Medicare on 92.35% of net earnings.

  • Fees and bad debt×1.02

    0% platform commission and 2% uncollected.

Notes and sources5 notes, 2 sources

Worth knowing

  • Utilisation is the number that surprises people. Very few freelancers bill more than 25 to 30 hours in a 40 hour week over a full year, because finding work, quoting, invoicing, and chasing payment all take time that nobody pays for. A rate set as though every hour were billable is short by roughly a third.
  • Self-employment tax is 15.3% on 92.35% of net earnings — both halves of Social Security and Medicare, where an employee pays one half and the employer pays the other. The Social Security portion stops at the annual wage base; Medicare does not. It is applied here to your income and retirement target, which is where it actually lands.
  • No income tax is calculated, and no deduction is modeled beyond treating business expenses as reducing the base. Federal income tax, the qualified business income deduction, state income tax, and your business structure all change the answer materially. The target income figure here is what you want before income tax, not after it.
  • Benefits are the other half of why freelance rates look high next to salaries. Employer-paid benefits average 30.0% of total compensation in private industry (BLS, June 2026), and a freelancer replaces all of it — health insurance, retirement, paid leave — out of the same rate.
  • This produces the rate you need, not the rate your market pays. If the two are far apart, the answer is usually to raise utilisation, lower overhead, or move upmarket — not to work the gap for free.

Sources

  • U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation (June 2026); U.S. Department of Labor Wage and Hour Division, Fair Labor Standards Act overtime and Part 541 exemption regulationsprimaryJune 2026retrieved 2026-09-11
  • Published seller fee schedules from each platform: Etsy Fees & Payments Policy and Help Center, eBay Selling Fees help pages, Amazon Selling on Amazon fee schedule, Shopify pricing page, TikTok Shop US Seller UniversitysecondaryJuly 2026retrieved 2026-07-31

It is that only some of your hours are billable, that you pay both halves of payroll tax, and that every benefit an employer used to provide now comes out of the same rate. This calculator works backwards from what you want to take home to what you actually need to charge.

Methodology

How this calculator works

Utilisation is the whole problem

A salaried employee is paid for every hour they are at work. A freelancer is paid only for hours a client will accept on an invoice, and the rest — proposals, quoting, invoicing, chasing payment, marketing, admin — are unpaid but unavoidable.

Twenty-five billable hours in a forty hour week is about 62% utilisation, and that is a realistic figure sustained over a year rather than a pessimistic one. Every billable hour therefore has to carry the cost of roughly 1.6 hours of your time, before any other adjustment.

What an employer was quietly paying

Employer-paid benefits average 30.0% of total compensation in private industry. Health insurance, retirement contributions, paid leave, and the employer half of payroll tax all disappear when you go independent, and all of them still have to be paid — now by you, out of your rate.

Self-employment tax is the sharpest of these. An employee pays 7.65% in payroll tax and their employer pays a matching 7.65%. A self-employed person pays the whole 15.3%, on 92.35% of net earnings. It is the most common first-year surprise in freelancing.

What is not calculated

Income tax. The target income here is what you want before federal and state income tax, not after. The qualified business income deduction, your business structure, and your state all change what you keep, and they deserve a proper answer rather than a guess.

What your market will pay. This produces the rate you need in order for the arithmetic to work. If that is far above what clients accept, the useful responses are to raise utilisation, cut overhead, or change what you sell — not to work the difference unpaid.

Location and data

Where the numbers come from

This calculator does not ask where you live, because the answer is the same in every state: it is arithmetic on the figures you enter and the published figures listed below. That is also why the result reports high confidence — there is no regional estimate in it to be uncertain about.

Nothing you enter is transmitted or stored. The calculation runs entirely in your browser, and the only place your inputs appear is in the page URL, so you can bookmark or share a result if you choose to.

  • primaryJune 2026v2026.09.1

    U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation (June 2026); U.S. Department of Labor Wage and Hour Division, Fair Labor Standards Act overtime and Part 541 exemption regulations

    Compensation shares are the published BLS Employer Costs for Employee Compensation figures for June 2026 — employer cost per hour worked, which is what an employer spends rather than what an employee receives after tax. The Fair Labor Standards Act figures are the federal floor only. Many states set stricter rules, and no state rules are encoded here, so nothing in this dataset should be read as establishing what any particular worker is owed.

  • secondaryJuly 2026v2026.07.1

    Published seller fee schedules from each platform: Etsy Fees & Payments Policy and Help Center, eBay Selling Fees help pages, Amazon Selling on Amazon fee schedule, Shopify pricing page, TikTok Shop US Seller University

    Every platform's fee model is versioned separately and carries its own last-verified date and source link, because they change independently and often. Marketplace fees are the most volatile data on this site — a rate can change with a month's notice — so any result built on them is an estimate of what a payout would be under the rates recorded here, never a guarantee of what a platform will actually pay. Each rate is editable in the calculator. Where a figure could not be confirmed by directly retrieving the platform's page, that is recorded on the platform entry rather than glossed over.

Full detail on every dataset is on the data sources page. Spotted something wrong? Report incorrect data.

Calibration

The judgements behind this estimate

These are the figures we chose rather than measured. For each one we record the range of values found across references, what we selected, and why — because an estimate you cannot interrogate is not much better than a guess. The 1 marked high risk are the ones most likely to be wrong and most consequential when they are.

  • Billable share of a freelancer's working weekhigh riskmedium confidence
    Observed range
    15 — 32 (typical 25)billable hours in a 40 hour week
    Why this value
    Finding work, quoting, invoicing, chasing payment, and admin all take time nobody pays for. Twenty-five billable hours is about 62% utilisation and is a realistic figure sustained across a full year rather than a pessimistic one. This is the largest single driver of the rate the calculator produces.
    Applies to
    Not regionally variable.
    Known limits
    Varies hugely by discipline and by how established the freelancer is. Someone with a full pipeline of retained clients bills far more than someone winning each project fresh. Marked high risk because setting it wrong is precisely the mistake that leaves a freelancer underpaid for years.
    Sources
    Editorial estimate; no agency measures freelance utilisation; Consistent with the two-to-two-and-a-half times multiple over an equivalent salaried hourly wage that the calculator produces
    Last verified
    2026-07-31 · reviewed biennial
  • Self-employment tax ratehigh confidence
    Observed range
    0.029 — 0.153 (typical 0.153)share of net earnings
    Why this value
    12.4% Social Security up to the annual wage base plus 2.9% Medicare with no cap, applied to 92.35% of net earnings. Both halves, where an employee pays one and the employer pays the other. Included because it is the largest and most common first-year surprise in freelancing.
    Applies to
    Federal, so uniform. State income tax is not modeled at all.
    Known limits
    Applied to the income and retirement target rather than solved circularly against revenue, which is close but not exact. No income tax, qualified business income deduction, or business-structure effect is modeled, and each of those materially changes what a freelancer keeps.
    Sources
    Self-Employment Contributions Act rates; Social Security Administration annual wage base
    Last verified
    2026-07-31 · reviewed annual

Cost factors

What changes the price most

Utilisation
The largest single factor. Dropping from 30 to 20 billable hours a week raises the rate you need by half.
Self-employment tax
15.3% on most net earnings, double what an employee pays. Roughly a seventh of the rate.
Health insurance
Fully yours now. At $550 a month it is about $6,600 a year that a salary would have largely covered.
Weeks worked
Every unpaid week off has to be funded by the weeks you do work.
Unpaid invoices
Money billed but never collected. Deposits and clear terms cut it faster than a higher rate does.
Retirement
Nobody matches it. Leaving it out makes freelancing look better than it is against a salaried job.

Questions

Frequently asked

How do I calculate my freelance hourly rate?

Add your income target, retirement saving, business overhead, and self-employment tax, gross that up for platform fees and unpaid invoices, then divide by the hours you can realistically bill in a year. The last step is where most rates go wrong, because people divide by hours worked rather than hours billed.

Why is a freelance rate higher than an employee wage?

Because only about 60% of your hours are billable, because you pay both halves of payroll tax rather than one, and because health insurance, retirement, and paid leave now come out of the same rate. Benefits alone average about 30% of total compensation for an employee. Two to two and a half times the equivalent hourly wage is normal.

What percentage of my hours will be billable?

For most freelancers, 50% to 70% sustained over a year. Twenty-five billable hours in a forty hour week is a realistic planning figure. Anyone assuming they will bill forty is setting a rate about 60% too low.

How much is self-employment tax?

15.3% on 92.35% of net earnings — 12.4% for Social Security up to the annual wage base and 2.9% for Medicare with no cap. An employee pays half of that and their employer pays the other half, so going independent effectively doubles it.

Should I charge hourly or a day rate?

Whichever your market expects; the underlying arithmetic is the same, and the day rate shown here is simply eight billable hours. Day rates tend to be cleaner to sell and easier to protect from scope creep, since a half-finished day still costs a day.