Start from the income you need
Most freelancers price by looking at the market, then discover the market rate does not cover their costs. Work backwards: (target income + business costs) ÷ billable hours. At 80,000 income, 12,000 costs and 1,200 billable hours, the rate is 76.67/hour — before self-employment tax.
Billable hours are fewer than you think
A 40-hour week is roughly 25 billable hours once you account for admin, sales, invoicing and learning. 1,200 billable hours a year is a realistic full-time figure; assuming 2,000 is the single biggest cause of underpricing.
The self-employment tax layer
- 15.3% SE tax applies to net profit, not revenue
- Gross-up: divide by (1 − 0.153 × 0.9235) to cover it
- Health insurance is usually self-funded — add it to costs
- No paid leave: 4 weeks off means 48 working weeks, not 52
Presenting the rate
Quote a day rate and a project rate alongside the hourly figure. Clients compare outcomes, not hours; hourly pricing punishes you for getting faster. Use the hourly number as your floor, not your price list.
Frequently Asked Questions
How many billable hours should I assume?
1,000–1,300 for full-time freelancing; higher only if you have steady retainers.
Should I include health insurance?
Yes, in business costs — it is a real annual expense you now carry.
Is this rate competitive?
It is the rate you need; competitiveness depends on your market and positioning.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
BizCalcTool runs entirely in your browser. The figures you enter are never uploaded, stored or shared — there is no backend to send them to.