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How the freelance rate is calculated
RateRight works backwards from the money you want to keep.
- Revenue needed = take-home ÷ (1 − tax rate) + expenses
- Billable hours per year = hours per week × (52 − weeks off)
- Hourly rate = revenue needed ÷ billable hours per year
- Daily rate = hourly rate × billable hours per week ÷ 5 working days
This is a planning estimate, not tax advice. Tax rules differ by country, so check with a local accountant for exact figures.
Why freelancers must charge more than an employee's hourly wage
An employee is paid for sick days, holidays, admin time and meetings. As a freelancer you only earn while you are billing. You also pay your own taxes, equipment, software and insurance, and you spend unpaid time finding clients and sending invoices. A fair freelance rate has to cover all of that.
Frequently asked questions
How do I calculate my freelance hourly rate?
Add your yearly expenses to the pre-tax income you need, then divide by the hours you can realistically bill in a year. RateRight does this automatically.
Why is my rate higher than an employee's hourly wage?
Freelancers pay their own taxes, expenses and time off, and cannot bill every working hour because of admin, marketing and gaps between projects.
How many billable hours per week is realistic?
Most freelancers bill 20 to 30 hours a week. The rest goes to finding clients, invoicing, communication and learning.
Should I include time off in my rate?
Yes. Holidays, sick days and slow periods are unpaid, so the weeks you do work must cover the weeks you do not.
Should I charge hourly or per project?
Use your hourly rate as a floor. For projects, estimate the hours, multiply by your rate, and add a buffer for revisions and delays.