Freelance Hourly Rate Calculator
Start from the income you want, subtract the realities — unbillable hours, costs, self-employment tax — and get the rate you must charge.
Why freelance rates must be higher than employee rates
A $40/hour salary and a $40/hour freelance rate are wildly different incomes. The freelancer pays both halves of Social Security/Medicare (15.3% self-employment tax), funds their own health insurance, retirement and equipment, gets zero paid vacation — and can only bill part of each week, because admin, proposals and marketing don’t invoice anyone.
Worked example
Target $80,000, costs $12,000/year, 4 weeks off, 25 billable hours/week (1,200 h/year): base rate $76.67. Adding a 20% cushion for self-employment tax and benefits → charge $92/hour (day rate ~$736). Note that’s ~2.4× the naive $80k ÷ 2,080 = $38 “employee math” — that multiple is normal, not greedy.
The billable-hours reality check
| Working style | Realistic billable h/week |
|---|---|
| Full-time freelancer, steady anchor clients | 28–32 |
| Full-time, project-based with constant sales effort | 20–25 |
| Agency-subcontract heavy (less sales, less admin) | 30–35 |
| Side freelancing around a day job | 8–15 |
Assuming 40 billable hours is the classic beginner mistake — it silently halves your real rate. Track one honest month before trusting any number.
From floor to actual price
- This calculator produces your floor — the rate below which the business quietly loses money. Market pricing sits on top: specialized skills, outcomes (“this redesign lifts conversion”), and scarce availability all justify charging above the floor, sometimes far above.
- Raise by project, not apology: quote new clients the new rate; legacy clients get notice at renewal.
- Day and project rates reduce hour-counting friction: day rate ≈ hourly × 8 with a modest discount for guaranteed volume, never below floor.
- Quarterly taxes: the cushion you charge needs to actually leave the checking account — set aside 25–30% of income as it arrives and pay IRS estimates each quarter.
Frequently asked questions
What is a good starting freelance rate rule of thumb?
Take the equivalent employee salary’s hourly figure (salary ÷ 2,080) and multiply by 1.5–2× — that covers self-employment tax, benefits and unbillable time. The calculator above replaces the rule of thumb with your actual numbers.
Why 20% for the tax and benefits cushion — is that enough?
It approximates the self-employment tax’s extra 7.65% employer half plus a modest benefits contribution. If you’re buying full-price health insurance and funding retirement seriously, 25–35% is more honest — the field accepts any number.
Should business costs include my home office and software?
Yes — anything the business must pay for you to deliver: software subscriptions, equipment amortized per year, insurance, coworking, marketing, professional fees. These are also broadly deductible, but the rate must recover them either way.
Hourly, day rate, or fixed project price?
Compute the hourly floor first — it prices everything else. Day rates suit on-site or intensive work; fixed project pricing rewards efficiency and is where experienced freelancers earn above their hourly floor, using estimated hours × floor as the never-go-below check.
Official sources
Every rate and threshold on this page comes from the issuing agency. Verify anything here against the primary source:
- IRS — Self-employment tax (Social Security and Medicare taxes) — the 15.3% combined self-employment tax rate — both halves of Social Security and Medicare — and the deduction for one-half of it
- IRS Instructions for Schedule SE (Form 1040) — self-employment tax applies to 92.35% of net profit: 12.4% Social Security up to the wage base, 2.9% Medicare with no ceiling
- IRS Topic no. 751 — Social Security and Medicare withholding rates — the employee side an employer pays for you: 6.2% + 1.45% = 7.65%, which is the extra half a freelancer absorbs
- SSA — Contribution and benefit base — 2026 Social Security wage base of $184,500 — the 12.4% half of SE tax stops there, so a high-billing year needs less cushion than 15.3% implies
- IRS — Estimated taxes — the quarterly payment obligation the tax cushion has to fund as income arrives
Last reviewed: 2026-08-22 · Report an issue