Freelance rate calculator: what to charge to match a salary
Dividing a salary by 2,080 hours is the most common way new freelancers set a rate, and it almost always comes out too low. Not every working hour is billable, there’s no paid time off, and the costs an employer used to cover, from health insurance to half of payroll taxes, are now yours. This calculator works out the rate that would actually match the salary you have in mind.
Freelance rate calculator
- Hourly rate to charge
- –
- Revenue needed per year
- –
- Billable hours per year
- –
- Salary ÷ 2,080 hours, for comparison
- –
| Where the revenue goes | Per year |
|---|
Self-employed people pay both halves of Social Security and Medicare as self-employment tax: 15.3% on 92.35% of net earnings, where an employee pays 7.65% and the employer pays the rest. The rate here covers that extra half so you’re comparing like with like. It doesn’t include income tax (which you’d owe on a salary too), the Social Security wage cap on very high earnings, or the deduction for half of self-employment tax. Everything here runs in your browser; nothing you enter is stored or sent.
What this calculator can help you understand
- The hourly rate you’d need to charge to match a salary.
- The revenue that rate needs to bring in each year.
- Where the money goes: your pay, business costs and the extra payroll tax.
When it’s useful
- When you’re leaving a job to freelance or consult.
- When a client asks for your rate.
- When you’re reviewing whether your current rate is enough.
Who it’s for
- New freelancers and consultants.
- Contractors comparing contract and salaried work.
- Anyone pricing their time for a side business.
What to enter
| Input | What it means | Where to find it |
|---|---|---|
| Salary you want to match | A salary you’d consider equivalent, before income tax | A current or past offer |
| Business costs per year | Costs an employer would have covered, plus running the business | Your estimates |
| Hours worked per week | Total hours you expect to work | Your plans |
| Share of hours you can bill | The share of working hours you charge clients for | Your experience |
| Working weeks per year | Weeks you’ll work after time off | Your plans |
How to use it
- Enter the salary you want your freelance work to match.
- Enter yearly business costs, including benefits you’d pay for yourself.
- Enter your weekly hours, the share you can bill, and working weeks.
- Read the hourly rate and the revenue it needs to bring in.
Understanding your results
- Billable hours per year = hours per week × share billable × working weeks.
- Revenue needed = salary + business costs + the employer’s share of payroll tax that you now pay.
- Hourly rate to charge = revenue needed ÷ billable hours.
A worked example
Suppose you want to match a $90,000 salary. You expect $12,000 a year in business costs, 40 working hours a week with 70% billable, and 46 working weeks.
- Billable hours: 1,288 a year.
- Extra payroll tax: about $6,791, the share an employer would have paid.
- Revenue needed: $108,791.
- Hourly rate: $84.47, compared with $43.27 from dividing the salary by 2,080.
Common mistakes
- Dividing a salary by 2,080.
- Assuming every working hour is billable.
- Forgetting benefits like health insurance, retirement matching and paid leave.
- Leaving out self-employment tax.
- Not setting money aside for quarterly estimated taxes.
What to do with your result
- Treat the rate as a minimum, and check what clients in your field pay.
- Compare it with salaried pay using the salary to hourly calculator.
- If you’re building up to full-time freelancing, see how long savings last with the business runway calculator.
Limitations to keep in mind
The calculator ignores income tax, which you’d owe on a salary too, the Social Security wage cap, the deduction for half of self-employment tax, and the qualified business income deduction. It assumes steady work across the year. A tax professional can help with your situation. This isn’t tax or business advice.
Frequently asked questions
Why is my freelance rate so much higher than my old hourly pay?
Because it has to cover unbilled hours, time off, business costs and the employer’s share of payroll taxes. In our example, matching a $90,000 salary takes $84.47 an hour, about 2.0 times $90,000 ÷ 2,080.
What is self-employment tax?
Social Security and Medicare tax for people who work for themselves: 15.3% of 92.35% of net self-employment earnings. Employees pay half of that (7.65%) and their employer pays the other half.
What share of my time can I bill?
It varies by field and by how established you are. Finding clients, invoicing, admin and learning all take time. In our example, billing 60% of hours instead of 70% raises the rate to $98.54.
What business costs should I include?
Health insurance, retirement contributions you’d otherwise get matched, equipment, software, professional insurance, accounting and a home office or coworking space.
Do I need to pay estimated taxes?
Usually, yes. If you expect to owe $1,000 or more in federal tax for the year, the IRS generally expects quarterly estimated payments.
Should I charge by the hour at all?
Hourly rates are a useful floor. Many freelancers price by project or value once they know their costs; this rate tells you the minimum a project needs to earn per hour of work.
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This calculator gives estimates for illustration, based on the figures you enter and the assumptions described on this page. It isn’t financial, tax or legal advice, an offer, or a guarantee of any outcome.