Freelance Rate Calculator: How Much Should You Charge?

The formula, in plain English

Every freelance rate comes from the same four terms:

Each term does a specific job, and the naive version of this sum fails on three of them at once:

• Target take-home — the money you actually keep. This is the only term most people get right, because it is the one they thought of first.
• Business expenses — every cost of being in business. Charge a rate that ignores them and your clients are getting your software subscriptions for free. This is the term people underestimate most; there is a whole section on it below.
• Self-employment tax — when you were employed, your employer paid half of your Social Security and Medicare tax. Nobody pays that half for you now. For a US sole proprietor that is 15.3% on 92.35% of net profit: 12.4% Social Security up to a 2026 wage base of $184,500, plus 2.9% Medicare with no cap (source: IRS Schedule SE; SSA 2026 COLA fact sheet). Our self-employment tax calculator breaks that figure down on its own.
• Billable hours — not hours worked. Pitching, scoping, invoicing, chasing late payment, and unpaid revisions are all real hours that no client pays for, and holiday is unpaid. A full-time schedule does not produce a full-time billable year.

On billable hours specifically: rather than take a published industry average, count what you genuinely invoiced over your last full quarter and multiply out. The default of 25 hours a week over 46 weeks in the calculator is a planning assumption to start from, not a statistic about freelancers — replace it with your own number as soon as you have one.

A worked example, all the way through

Take a freelancer who needs to take home $70,000, spends $8,000 a year running the business, can bill 25 hours a week for 46 weeks, and wants a 10% buffer. Here is every step:

The number worth sitting with: the naive calculation — $70,000 ÷ 2,080 hours — produces $33.65 an hour. The real floor for the same take-home is $85.63. That gap is not margin or ambition; it is tax, costs, and the hours nobody pays for. Quoting the first number and hoping is how freelancers end up working a full year and wondering where the money went.

Estimates — confirm with your tax professional.

The input everyone guesses wrong: your actual business expenses

Of the four terms, three are decisions you make. One is a fact you have to look up — and almost nobody looks it up. Asked what they spend on the business each year, most freelancers estimate from memory, and memory reliably lands low. The costs that go missing are the quiet recurring ones:

• Software subscriptions, billed monthly and forgotten — often a dozen small charges
• Platform and payment-processor fees skimmed off the top of invoices before the money lands
• Hardware and its replacement cycle, plus accessories bought piecemeal
• The home-office share of rent and utilities — see the home office deduction calculator
• Insurance, professional memberships, and accounting fees

Underestimate that total by $3,000 and, on the 1,150 billable hours above, you have just under-priced yourself by about $2.61 an hour — every hour, all year.

The fix is not a better guess, it is a real number. Most of those costs already arrived in your inbox as receipts and invoices. ExpenseBot does spend capture: it reads those receipts out of Gmail and writes them into a Google Sheet that stays in your own Google Drive, categorised, so “annual business expenses” becomes a figure you can read off a spreadsheet instead of a number you invent. Feed that into the calculator above and the rate it returns is grounded in what you actually spent.

To be clear about what that is and is not: it is a historical total of money already spent, used once to set a rate. It is not a forecast, a budget, or a projection.

Hourly vs day rate vs project pricing

The calculator gives you an hourly figure because that is the unit everything else converts from. Which unit you actually quote is a separate decision:

Converting between them is arithmetic, not strategy. A day rate is the hourly figure times the hours you will really work in a day. A project price should be checked backwards: divide the fixed fee by the hours you honestly expect it to take, and if that number sits below your calculated hourly rate, the project is priced under your floor — no matter how large the total looks.

Raising your rate with existing clients

If the calculator returned a number well above what you currently charge, the gap is usually with long-standing clients whose rate was set years ago and never revisited. A few things make that conversation go better:

• Give notice, and give it in writing. A rate that changes at the start of the next quarter or the next contract period reads as a business decision. One that changes on the next invoice reads as a surprise charge.
• Anchor it to your costs, not to your worth. “My rate is going from X to Y from January” needs no justification beyond the fact that your costs moved. Arguments about value invite negotiation about value.
• Give one number, not a range. A range is read as its lower bound.
• Decide in advance what happens if they decline. Know before you send the email whether you are willing to keep the client at the old rate, taper them off, or finish and stop. The worst outcome is discovering you have no answer while they are waiting for one.