Question 1

How do I calculate my freelance rate?

Accepted Answer

Start with your target annual take-home income, then add back self-employment taxes (~15.3%), federal and state income taxes, health insurance and other benefits you need to self-fund, retirement savings, business expenses, and a buffer for unpaid time (vacation, sick days, holidays). Divide the total by your annual billable hours to get your hourly rate.

Question 2

Why is a freelance rate higher than an equivalent salary's hourly rate?

Accepted Answer

Freelancers pay the full 15.3% self-employment tax (employees only pay half), don't receive employer-provided benefits (health insurance, retirement match, paid time off), and have unbillable hours spent on admin, marketing, and business development. A $75,000 salary might require a freelance rate of $65–$85/hour to match.

Question 3

How many billable hours should I plan for as a freelancer?

Accepted Answer

Most freelancers bill 25–30 hours per week, with the rest spent on business development, admin, and overhead. After accounting for vacation and holidays, plan for roughly 1,200–1,500 billable hours per year. Using too optimistic a number (like 2,080 — full-time W-2 hours) will set your rate too low.

Freelance Rate

Your Goals

Hourly Rate

Day Rate (8 hr)

Weekly Rate

Monthly Gross

Annual Gross Needed

Effective Tax Rate

Where Your Gross Revenue Goes

Hourly Rate by Billable Hours