What Should You Charge as a Freelancer?
You've seen what your salary really pays per hour. Now find out what you'd need to charge as a freelancer to match it or beat it.
60% is considered strong for most freelancers (3 days billed out of 5)
Your Estimated Tax Rates on Freelance Income
These are auto-calculated estimates. Adjust them if you know your effective rates will differ.
Freelance Rate Calculator: What to Charge to Match Your Salary
One of the most common questions for professionals considering freelancing is: "What should I charge?" The answer is almost always higher than you think. Most salaried employees underestimate the true cost of going freelance by 30% to 50%.
Our freelance minimum rate calculator starts with your current real annual take-home (the number from our main calculator) and adds back everything your employer currently covers: health insurance, retirement contributions, professional development, and other benefits. Then it factors in the realities of freelancing: non-billable time (you can't bill 40 hours a week when you're also running a business), self-employment taxes, business overhead, and income uncertainty.
The result is your minimum viable freelance rate: the hourly charge you need to maintain your current standard of living. Most professionals find they need to charge 1.5x to 2.5x their salaried hourly rate to break even as a freelancer.
The calculator covers self-employment tax calculations for eight different countries and regions. For the United States, it applies the full 15.3% FICA tax (both the employee and employer shares) on 92.35% of net self-employment income, as prescribed by the IRS. For the United Kingdom, it factors in Class 2 and Class 4 National Insurance contributions. Canadian freelancers get CPP adjustments at the self-employed rate of 11.9%. Australia, Germany, Singapore, and India each have tailored estimates that account for their unique self-employment tax structures.
The billable efficiency slider is one of the most important inputs in this calculator. At 60% efficiency, only 3 out of 5 working days generate revenue. The other 40% goes to admin tasks, invoicing, client acquisition, proposals, networking, accounting, continuing education, and the general overhead of running a business. Increasing your efficiency from 60% to 75% can reduce your required hourly rate by 20% or more, which is why established freelancers with repeat clients and streamlined workflows can charge more competitively while earning more.
The income uncertainty buffer accounts for the feast-or-famine nature of freelance work. Even successful freelancers experience gaps between projects, delayed payments, and seasonal fluctuations. A 15% buffer (the default) means you're building a 15% margin into your rate to cover these gaps. As you build a longer track record and a larger client base, you may be able to reduce this buffer. New freelancers should consider using a higher buffer of 25% to 40% until they have a stable pipeline.
One key insight this calculator reveals is the true cost of benefits. Most salaried employees don't realize that their employer is paying thousands of dollars per year in health insurance premiums, retirement contributions, professional development budgets, and other perks. When you go freelance, you must replace all of these yourself. Our calculator adds these back into your target income, ensuring that your freelance rate doesn't just match your current paycheck but actually replaces your full compensation package.
Frequently Asked Questions
Why do freelancers need to charge more than their salaried hourly rate?
Freelancers typically need to charge 1.5x to 2.5x their effective salaried hourly rate because they cover both sides of payroll taxes, pay for their own health insurance and retirement, spend a significant portion of their time on non-billable activities (admin, marketing, client acquisition), and face income uncertainty between projects.
How is the freelance rate calculated?
We start with your target annual income (what you'd need to match your current lifestyle), add the value of employer-provided benefits, health insurance costs, and business overhead. Then we divide by your estimated billable hours per year. We also add a buffer for income uncertainty and self-employment taxes.
What is a good billable efficiency percentage?
60% billable efficiency is considered strong for most freelancers. This means only 3 out of 5 working days generate revenue. The rest goes to admin, marketing, proposals, accounting, and professional development. Highly experienced freelancers with established client bases can reach 70-80%.
Does this include self-employment tax?
Yes, for US users we automatically factor in the full 15.3% self-employment tax (both employee and employer shares of FICA). For other countries, select your country from the dropdown for the appropriate tax treatment.
Should I charge hourly, per project, or on a retainer basis?
Hourly billing is safest when you\'re new to a type of work, but it caps your earnings as you get faster. Project-based pricing rewards efficiency and aligns with client expectations. Retainers provide stable monthly income and are ideal for ongoing work like maintenance or consulting. Many experienced freelancers use a mix: retainer for base income, project fees for larger deliverables.
How do I handle unpaid time off, holidays, and sick days as a freelancer?
Unlike salaried employees, freelancers don\'t get paid time off. The solution is to build the cost of your time off into your rate. For example, if you want 4 weeks of vacation plus 2 weeks of sick/holiday time, calculate your rate based on 46 working weeks instead of 52. This ensures your target income is earned over fewer working weeks, effectively paying yourself for time off.
How do I know if my freelance rate is too high or too low?
A good starting point: if you\'re consistently winning every proposal, your rate is probably too low. If you rarely hear back after quoting, it may be too high. Industry benchmarks suggest most freelancers need to charge 1.5x-2.5x their salaried hourly equivalent. Your rate should cover your target income, taxes, benefits, overhead, and non-billable time. Use this calculator to find your minimum viable rate, then adjust upward based on your experience and market demand.
Do I need to register a business or form an LLC to start freelancing?
You can start freelancing as a sole proprietor without registering a formal business entity. However, forming an LLC (or equivalent in your country) provides liability protection and can offer tax advantages. In the US, many freelancers start as sole proprietors and transition to an LLC or S-corp once they reach $50,000-$100,000 in annual revenue. Consult a tax professional for advice specific to your situation.