Rate Calculator
Calculate your ideal minimum hourly rate to ensure your freelance business is profitable based on desired salary and business expenses.
Rate Configuration
1. Financial Goals
Software, equipment, insurance, marketing, etc.
2. Time Capacity
Vacation, sick days, holidays.
Not all worked hours are billable!
Minimum Target Rate
Your Minimum Hourly Rate
Charge this amount or higher to meet your financial goals given your available billable time.
Never quote exactly. Always round up to the nearest $5 or $10 to account for unpaid admin work and taxes.
What is the Freelance Rate Calculator?
The Freelance Rate Calculator is a tool designed to help independent professionals, consultants, and freelancers determine their optimal hourly, daily, or project rates based on their actual living expenses, business costs, and desired profit margins. Instead of guessing a rate, this tool uses a "bottom-up" approach to ensure profitability and financial security.
How to Use the Rate Calculator
- Enter your living expenses: Input your monthly personal costs such as rent, groceries, and utilities.
- Add business expenses: Factor in software subscriptions, marketing costs, accounting, and internet.
- Set taxes and savings: Define the percentage of your income to set aside for income taxes and emergency savings.
- Define billable hours: Enter how many hours a week you realistically expect to be doing paid client work (excluding admin or marketing time).
How It Works: The Logic & Math
The calculator determines a sustainable baseline rate using algebraic modeling. First, it sums your monthly personal and business expenses. Then, it scales that number up to account for tax and savings buffers. Finally, it divides the required annual gross revenue by your total projected billable hours for the year.
Gross Required = (Personal Exp + Business Exp) / (1 - (Tax % + Savings %))
Hourly Rate = (Gross Required * 12) / (Annual Billable Hours)
Real-Life Use Cases & Examples
- New Freelancers Transitioning to Full-Time: An employee quitting their 9-to-5 job uses the tool to reverse-engineer what hourly rate they must charge just to maintain their current quality of life, factoring in self-employment taxes.
- Agencies Adjusting Retainers: A consultant realizes they are spending 30% of their time on unbillable admin work. By adjusting the "Billable Hours" parameter down, they recalculate a higher rate to offset the unbilled time.
- Digital Nomads Geo-Arbitraging: A freelancer moving to a location with lower living costs can recalculate their rates to either offer more competitive pricing or increase their profit margin.
Frequently Asked Questions (FAQ)
How many billable hours should I plan for?
A common mistake is assuming 40 billable hours a week. realistically, full-time freelancers should estimate between 20 to 25 billable hours per week, with the remainder spent on marketing, administration, and professional development.
Does it calculate self-employment tax?
You can manually input your expected effective tax rate percentage. In the US, for example, you would typically put 25-30% to cover both federal income taxes and self-employment (FICA) taxes safely.
(Desired Salary + Total Business Expenses) ÷ (Weeks Worked per Year × Billable Hours per Week) The tools and calculators provided on The Simple Toolbox are intended for educational and informational purposes only. They do not constitute financial, legal, tax, or professional advice. While we strive to keep calculations accurate, numbers are based on user inputs and standard assumptions that may not apply to your specific situation. Always consult with a certified professional (such as a CPA, financial advisor, or attorney) before making significant financial or business decisions.
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