What is the Freelance Rate?
Freelancers routinely undercharge because they divide a salary target by 2,000 hours. That ignores three things: business costs, tax and social contributions paid personally, and the large share of time spent on unbillable work — sales, admin, invoicing, learning.
A realistic billable share is 60–70%. The rest of your week still has to be paid for.
Formula & worked example
Billable hours = Weeks × hours × billable %
Rate = Revenue / billable hours
Worked example: a 60,000 take-home target at 30% tax needs 85,714 pre-tax, plus 8,000 of costs — 93,714 of revenue. Working 46 weeks at 40 hours with a 65% billable share gives 1,196 billable hours, so the rate must be about 78 an hour, or roughly 627 a day.
How to use this freelance rate calculator
- Set your target take-home — what you actually want to live on.
- Add business costs: software, equipment, insurance, accounting, workspace.
- Use a realistic tax rate including self-employment or social contributions.
- Be honest about the billable share — most freelancers overestimate it badly.
Smart tips
- If your rate feels high, compare it to an employee's total cost to a business — salary plus benefits, taxes, equipment and paid leave.
- Raise rates for new clients first. It is easier than renegotiating existing ones.
- Value-based pricing on outcomes beats hourly billing once you are established.
- Build a buffer for late payers; cash flow, not profit, is what kills freelance businesses.
- Review your rate annually. Inflation alone erodes it if you never raise it.
Frequently asked questions
How do I calculate my freelance hourly rate?
Work out the revenue you need after tax and business costs, then divide by realistically billable hours — usually 60–70% of your working time.
What percentage of my time is billable?
Most freelancers achieve 55–70%. The rest goes to sales, admin, invoicing, and professional development.
Should I charge hourly or by project?
Project or value-based pricing usually earns more once you can estimate reliably, since it decouples income from hours worked.
How much should I set aside for tax?
Typically 25–40% of revenue depending on your country, including income tax and self-employment or social contributions.
Want the theory behind the numbers? Read our freelancing guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 8 Sep 2026. How we check these numbers.