Frequently Asked Questions

Start with your desired annual take-home income. Add your estimated annual business expenses (software, equipment, subscriptions) and any self-funded costs you'd normally get from an employer (health insurance, retirement contributions). Then divide by your realistic annual billable hours — not 2,080. Most freelancers have 20-30 billable hours per week over 46-50 working weeks, giving roughly 1,000-1,500 billable hours per year. Use our freelance hourly rate calculator to do the math interactively.

Dividing a salary by 2,080 (40 hrs x 52 weeks) ignores three critical realities of freelancing. First, freelancers have significant non-billable time — admin, marketing, client acquisition, and professional development can consume 30-50% of your working hours. Second, employers cover costs you'll now pay yourself: health insurance, retirement contributions, payroll taxes, and equipment. Third, freelancers typically take unpaid time off for vacation, sick days, and holidays. A $100K salary divided by 2,080 is ~$48/hr, but a realistic freelance equivalent is often $90-120/hr once these factors are included.

This varies by industry, but 20-30 billable hours out of a 40-hour work week is common. Software developers and designers often bill 25-30 hours; consultants and agency owners might bill 15-25. The rest of the week goes to client communication, proposals, invoicing, marketing, and skill development. Be honest with yourself — track your time for a few weeks to see your real billable percentage, then use that number in the calculator.

A day rate is simply your hourly rate multiplied by your billable hours per day. Many clients prefer day rates because they're easier to budget for and don't incentivize slow work the way hourly billing can. To calculate your day rate, multiply your target hourly rate by your billable hours per day (usually 6-7 hours out of an 8-hour day). Use our day rate calculator to convert between the two.

Include all costs needed to run your freelance business: software subscriptions, hardware and equipment, internet and phone, professional services (accountant, lawyer), insurance (professional liability), marketing and website costs, travel and meals for client meetings, and continuing education. Also include a budget for irregular expenses like conference attendance or equipment replacement every few years.

This tool is tax-agnostic since tax rates vary enormously by country and personal situation. The self-funded costs field is for things employers typically cover: health insurance, retirement/pension contributions, and other benefits. For taxes, calculate your post-tax income goal separately and enter it as your desired annual income. You can also add an estimated tax amount to the business expenses or self-funded costs fields if you prefer to calculate a pre-tax rate.

Start with 52 weeks, then subtract: vacation (2-4 weeks), public holidays (~2 weeks depending on country), sick days (1-2 weeks), and professional development/training (1-2 weeks). A typical freelance year has 46-48 working weeks. The calculator defaults to 48, accounting for ~4 weeks off, but adjust based on your own plans.