How the freelance rate calculator works
Your rate has to cover three things: the income you want to keep, your business costs, and the tax on what you earn. The calculator works backwards from the money you want to take home:
Hourly rate = (Take-home income ÷ (1 − tax rate) + business costs) ÷ billable hours per year
- Billable hours are hours a client pays for. Admin, sales, invoicing and learning don't count, which is why 25 billable hours a week is a realistic starting point for a full-time freelancer.
- Weeks off cover holidays, public holidays and sick days. Nobody bills 52 weeks a year.
- Tax is income tax plus any social contributions where you live. If you're unsure, use our tax set-aside calculator or ask a local accountant.
A worked example
These are the numbers already in the calculator above:
| Item | Amount |
|---|---|
| Take-home income wanted | 40,000 |
| Before 25% tax (40,000 ÷ 0.75) | 53,333 |
| Plus business costs | 3,000 |
| You need to bill per year | 56,333 |
| Billable hours (46 weeks × 25 hours) | 1,150 |
| Hourly rate | about 49 |
| Day rate (8 hours) | about 392 |
This is your minimum. If clients happily pay it, your rate is probably too low. Many freelancers also quote per project rather than per hour once they know how long a job takes.
Turn the rate into paying clients
Knowing your number is step one. The AI Freelancer Toolkit shows seven services you can sell with ChatGPT and Claude, with a pricing calculator, client tracker and ready-to-send templates.
Already have clients? The Small Business Starter Kit gives you invoices, quotes and an income tracker that does the maths.
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