Freelancer Contract Rate Calculator
Calculate a sustainable freelance hourly or project rate.
Factor in taxes, overhead, desired salary, and billable hours to price contracts accurately.
Freelancer contract rate vs. salary comparison is essential because a freelance hourly rate must compensate for benefits, taxes, downtime, and business expenses that a salaried employee receives automatically. A $50/hour freelance rate is NOT equivalent to a $50/hour salaried position.
Equivalent salary formula: Equivalent Salary = Hourly Rate × Billable Hours per Year Billable Hours per Year = Total Work Hours − Unbillable Time
Typical unbillable time for freelancers (out of 2,080 annual hours):
- Business development / proposals: 15–20%
- Admin, invoicing, meetings: 10%
- Unpaid gaps between contracts: 10–20%
- Effective billable rate: ~60–70% of total hours
True cost comparison (what you need to earn to match salary):
| Salary Benefit | Annual Value |
|---|---|
| Health insurance (self-pay) | $7,000–$15,000 |
| Dental + vision | $1,500–$3,000 |
| Employer 401k match (typical 3%) | $1,500–$3,000 |
| Self-employment tax extra burden | ~7.65% of income |
| Paid vacation (15 days) | ~5.8% of salary |
| Sick days (10 days) | ~3.8% of salary |
| Total benefits premium | ~$15,000–$25,000+ |
Required freelance rate formula:
Work backwards from what you want to keep, and mind the direction of the tax step.
1. After-tax needs = Take-Home Pay + Health Insurance + Retirement 2. Pre-tax income = After-tax needs ÷ (1 − Tax Rate) 3. Revenue to bill = Pre-tax income + Business Expenses 4. Required Rate = Revenue to bill ÷ Billable Hours
Step 2 is where most people go wrong, including a lot of published rate calculators. You divide by one minus the rate. Multiplying by one plus the rate is not the same operation and it always leaves you short. Want $80,000 clear at 30%? That needs $80,000 ÷ 0.70 = $114,286 of taxable income. The multiply gives $104,000, and 30% of $104,000 is $31,200, so you would finish the year with $72,800 and a $7,200 hole.
Worked example: Take-home target: $80,000/year. Tax rate 30%. Health insurance $600/month. Retirement 10%. Business expenses $5,000. Billing 30 hours a week, 45 weeks.
After-tax needs: $80,000 + $7,200 insurance + $8,000 retirement = $95,200 Pre-tax income: $95,200 ÷ 0.70 = $136,000 Revenue to bill: $136,000 + $5,000 = $141,000 Billable hours: 30 × 45 = 1,350 Required hourly rate = $141,000 ÷ 1,350 = $104.44/hour, which the calculator rounds up to $105.
That number surprises people, and it is the point of the exercise. Billing $80,000 across those same 1,350 hours, about $59/hour, would leave roughly $35,800 in hand once tax, insurance, retirement and expenses come out. Less than half of what you were aiming for.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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