Freelance Rate Calculator
This freelance rate calculator works out your rate from what you need to live on: target take-home pay, tax and pension share, business costs and the time that is really paid. You get the minimum hourly rate and day rate, plus a table showing how the rate changes with utilization.
Source: Wikipedia – Billable hour (billable hours and utilization). Updated: .
How it is calculated
The minimum hourly rate is the revenue you need per year divided by the hours you actually get paid for. Three steps lie behind it: the target take-home pay gives the profit needed before tax and provision, business costs are added, and the total is spread over the billable hours.
How it is calculated
- Profit: target take-home ÷ (1 − tax and provision share). With 36,000 net and 30 percent that is about 51,429.
- Revenue needed: profit plus business costs; with 6,000 of costs, about 57,429 a year.
- Working days: 52 weeks times working days per week, minus vacation, sickness and holidays. With 5 days, 25 vacation, 8 sick and 10 holiday days, 217 days remain.
- Billable time: only part of your working time is paid. At 65 percent that is about 141 days or 1,128 hours, giving a minimum hourly rate of roughly 50.89.
Utilization, VAT and limits
The utilization table shows how much the rate needed moves: with half your time paid it is about 30 percent higher than at 65 percent. VAT or sales tax is added on top if you need it. Tax and provision are your own estimate; the share that really applies depends on country, legal form and personal situation, and the calculation is no substitute for tax advice. To check the profit per sale use the margin calculator, to turn a monthly salary into an hourly wage the hourly rate to salary calculator, and to see the effect of a raise the salary increase calculator.
Frequently asked questions
How do I calculate my freelance hourly rate?
Gross your target take-home pay up to a profit before tax, add business costs and divide the total by your billable hours. Example: 57,429 revenue ÷ 1,128 hours = about 50.89 an hour.
Why is a freelance rate higher than an employee’s hourly wage?
Freelancers pay for their own vacation, sickness, business costs and pension, and can bill only part of their time. The rate has to carry all of that.
How many hours can I bill per year?
Usually far fewer than you work: after vacation, sickness and holidays about 200 to 220 working days remain, of which often only 50 to 70 percent is paid work.
What is the difference between an hourly rate and a day rate?
The day rate is the revenue needed divided by the billable days, that is the hourly rate times working hours per day. It is often quoted for projects instead of the hourly rate.
Does VAT have to be added to the rate?
If you are VAT-registered you add it to the net rate and pass it on. The tool shows the gross rate on request; whether and how you charge it depends on your status.
Sources and legal basis
- Wikipedia – Billable hour (billable hours and utilization)
- Wikipedia – Profit (Gewinn = Umsatz minus Kosten)
As of: · Editorial policy
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