Calculate the hourly rate needed to hit a target income as a freelancer.
Freelance rates must cover tax, expenses and unpaid time, so the required rate is far above an equivalent salary divided by 2,080 hours. Utilisation above about 70 per cent is rarely sustainable because admin and sales are unbillable. Setting a rate by comparing to an employed salary understates it by roughly half, because employment includes paid leave, employer contributions and no unbillable time.
Freelance Rate
Rate = (target income ÷ (1 − tax rate) + expenses) ÷ annual billable hours
Rate = (target income ÷ (1 − tax rate) + expenses) ÷ annual billable hours Freelance rates must cover tax, expenses and unpaid time, so the required rate is far above an equivalent salary divided by 2,080 hours. Utilisation above about 70 per cent is rarely sustainable because admin and sales are unbillable.
Setting a rate by comparing to an employed salary understates it by roughly half, because employment includes paid leave, employer contributions and no unbillable time.
This calculator takes 5 inputs: Target take-home income, Annual business expenses, Effective tax and contributions rate, Working weeks per year, Billable hours per week. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.