Freelance Rate Calculator

How to Calculate Your Freelance Rate

Transitioning from a salaried position to freelancing requires careful financial planning. Many new freelancers make the mistake of simply dividing their annual salary by 2,080 hours (40 hours x 52 weeks) to arrive at an hourly rate. This approach vastly underestimates the true cost of freelancing, leaving you earning far less than you did as an employee.

As a freelancer, you must cover expenses that your employer previously handled: health insurance, retirement contributions, paid time off, self-employment tax (15.3% in the US for Social Security and Medicare), equipment, software, accounting fees, and more. These hidden costs can easily add 30-50% on top of your base salary needs.

Additionally, not all of your working hours are billable. Administrative tasks, marketing, client communication, invoicing, and professional development typically consume 25-40% of your time. Our calculator factors in all these variables to give you a realistic freelance rate that ensures you maintain -- or exceed -- your previous standard of living.