A freelance rate has to cover more than an equivalent salary's hourly split. Enter the income you want to match and this tool adds back business expenses, self-funded benefits, extra self-employment tax, and unbillable time to find the hourly and day rate you actually need to charge.
The $78.05 hour that replaces a $33.65 one
On $70,000 of target income, $5,000 of business expenses, $12,000 of lost benefits, 7.65% self-employment tax, 25 billable hours a week and 48 weeks worked, the required rate is $78.05 an hour, or $624.37 a day. The arithmetic: 70,000 + 5,000 + 12,000 = $87,000 of costs to cover, plus $6,656 of self-employment tax, is $93,656 of invoices; spread over 25 × 48 = 1,200 billable hours, that is $78.05.
An employee on the same $70,000 earns $33.65 an hour across a standard 2,080-hour year, so the freelance rate is 2.32× the salaried one. That multiplier is what to sanity-check a quote against, and 2× to 3× is normal: a salaried employee is paid for all 2,080 hours however productive each one is, gets employer-funded benefits and never sees self-employment tax, while a freelancer is paid only for billable hours and funds benefits, extra tax and expenses out of the same target income. The hourly figure is a minimum averaged across a realistic year, not a rate every client will pay.
2,080 paid hours against 1,200 billable ones
Billable hours are only the time you can put on an invoice. Marketing, admin, invoicing, chasing new clients and unpaid pitches are not billable, which is why most freelancers realistically bill 20 to 30 hours inside a 40-hour week. Weeks worked is 52 minus vacation, sick time and the slow periods you expect; employees are paid through those weeks and freelancers generally are not, so pricing them in now is what avoids a January shortfall.
Both numbers are your own estimates and the tool takes them at face value, because most freelancers cannot bill 40 hours a week every week. The employee side is not an estimate: the employee-equivalent wage assumes the standard 2,080-hour work year, 40 hours × 52 weeks, which an employer pays in full regardless of holidays or sick leave. The gap between 2,080 paid hours and roughly 1,200 billable ones is most of the multiplier.
The 7.65% default is the employer half of US FICA, nothing more
That default is the employer-side share of US Social Security and Medicare, 6.2% plus 1.45%, which a self-employed person pays on top of the employee-side share they would owe anyway. Outside the US, or for a fuller self-employment tax picture, replace it with whatever extra charge your own system imposes; the rest of the model is country-neutral arithmetic.
Whatever you type is applied as a flat percentage of the combined income-plus-overhead figure. This is rate planning, not a tax return: it does not model progressive brackets, deductions or country-specific self-employment rules, and real tax bills vary by country, income level and deductions. It also does not cover ordinary income tax, which is the same whether you earn a given taxable income as an employee or as a freelancer, so pair this with an income tax or take-home pay calculator for the full picture.
Pricing the benefits your employer stopped paying for
For lost benefits, add up what an employer would have spent on your behalf: health insurance premiums, any retirement contribution match, and the value of paid time off. In the US that commonly runs 15 to 30 percent of salary, and the $12,000 used against $70,000 above sits inside that band. Adjust it for your own market and situation.
Benefits value and business expenses are both estimates you supply, and each moves the required rate directly. Every $1,000 you add to either raises required revenue by $1,000 plus self-employment tax on it, which at 7.65% is $1,076.50, or about $0.90 an hour once spread over 1,200 billable hours.
Treat the result as a floor to quote from, not a price the market has agreed
The tool does not account for client negotiation power or market rates in your field. What it cannot do is tell you how much clients will actually pay: it gives you the rate below which the year falls short of your target income, which makes it a floor to price up from rather than a guarantee.
It is also why the common shortcut of adding 25 to 50 percent to a target hourly wage understates the gap: the example above needs 2.32× the salaried wage, not 1.25× to 1.5×. Adding unbillable hours, lost benefits and self-employment tax separately makes the multiplier follow your own numbers instead of a generic rule.
Sources and methodology
Every figure on this page comes from what you type in - the tool fetches no live tax tables, benefit costs, or market rates, and it applies your self-employment tax percentage as a single flat rate rather than filing a return. What the sources below fix is where the defaults came from. The calculator is built around one tax regime, the United States: its 7.65% default is the employer-side share of US Social Security and Medicare, and its figures are shown in US dollars. It offers no UK, India, or other country mode, so no HMRC or Income Tax Department authority is listed here - outside the US, replace the 7.65% with whatever additional charge your own system imposes on the self-employed, and treat the rest of the model as country-neutral arithmetic. Links open in a new tab.
Two figures on this page have no authority behind them, and should not be given one. The “2× to 3×” rate multiplier described above and the common advice that benefits are worth 15 to 30 percent of salary are working rules of thumb from freelance practice, not published standards or government guidance. They are here as a sanity check on your own inputs, nothing more.