Freelance "Real Rate" Calculator
Determine a truly sustainable hourly billing rate that covers your target net salary, business overhead expenses, planned time off, and real-world tax withholdings.
Factoring in overhead expenses ensures your clients pay for your costs, not you.
| Period | Gross Rev | Expenses | Taxes | Net Income |
|---|---|---|---|---|
| Annual | $0.00 | $0.00 | $0.00 | $0.00 |
| Monthly | $0.00 | $0.00 | $0.00 | $0.00 |
| Weekly | $0.00 | $0.00 | $0.00 | $0.00 |
| Daily | $0.00 | $0.00 | $0.00 | $0.00 |
Play with parameters. Find out how custom rates or customized hours impact your work schedules and take-home income.
0.0 hrs / week
$0.00
Save different rate/hours scenarios to compare them side-by-side. All scenarios are saved locally in your browser.
Freelancer 'Real Rate' Calculator Guide & FAQs
Calculating Your Real Freelance Hourly Rate
Many freelancers make the mistake of setting their rates by dividing their target salary by 2,000 hours (a standard 40-hour work week). This fails to account for three massive expenses: overhead, taxes, and unbillable time. To run a sustainable business, you must calculate a 'Real Rate' that factors in your full expenses and working capacity.
First, subtract non-billable time. A standard year has 365 days, but after subtracting weekends, national holidays, planned vacation, sick leave, and time spent on administrative tasks (marketing, invoicing, client pitching), a freelancer typically has only 1,000 to 1,200 billable hours per year. Next, add your business expenses (software, hardware, insurance, accounting) and self-employment taxes (which includes both halves of Social Security and Medicare). Dividing your target net income plus expenses by your actual billable hours reveals your true baseline rate.
Adjusting for Financial Safety
Our rate calculator factors in progressive self-employment tax estimations and overhead itemizations in real-time. By adjusting the sliders, you can visualize how a small increase in non-billable time or overhead affects your required hourly rate, helping you set competitive yet profitable pricing.
Frequently Asked Questions
What is the difference between billable and non-billable hours?
Billable hours are time spent directly working on client deliverables for which you charge. Non-billable hours include administrative tasks, bookkeeping, marketing, self-education, and client pitches that you must perform but cannot charge for directly.
How do taxes affect my freelance hourly rate?
As a freelancer, you are responsible for paying self-employment taxes (FICA), which cover both the employee and employer shares of Social Security and Medicare. This adds roughly 15.3% on top of normal income taxes, which must be built into your hourly rate.
How much should I allocate for overhead expenses?
A safe rule of thumb is to allocate 20% to 30% of your target income for overhead. This includes software subscriptions, equipment, health insurance, professional services, office space, and marketing costs.