Phase 1 · Core Sovereign Layer
Freelance Rate Optimizer
Your rate isn't what you keep. Set the take-home you actually want and watch the true hourly rate emerge — after FICA, income tax, health premiums, overhead and the hours you can't bill.
Under the hood
The math, fully exposed
We build the rate up from what you want to keep — no black box:
Self-employment tax = 15.3% × 92.35% ≈ 14.13% of profit
Required pre-tax profit = take-home ÷ (1 − 14.13% − income tax rate)
Annual revenue = pre-tax profit + business expenses + health premiums
Billable hours / year = billable hours per week × weeks worked
Hourly rate = annual revenue ÷ billable hours per year
- Why gross up first: to keep your target after tax, you must bill enough to survive both self-employment tax (both halves of FICA) and income tax — so profit is always larger than take-home.
- Why overhead rides on top: expenses and health premiums aren't paid from your salary; they're recovered separately inside your revenue, before a single dollar reaches you.
- Why billable hours dominate: dividing by realistic hours is the whole game. Halving billable hours nearly doubles the rate you must charge — non-billable time is the silent tax.
Your directives
What to do next, based on your numbers
Adjust the sliders to generate tailored recommendations.
Answers
Frequently asked questions
How do I calculate the right freelance hourly rate?
Work backwards from the take-home you want, not forwards from a number that "sounds fair". Gross your target up for taxes to find required pre-tax profit, add business expenses and health premiums to get the revenue you must bill, then divide by the hours you can realistically bill in a year. This calculator does exactly that, with every step shown.
Why is my freelance rate so much higher than my old salary hourly rate?
Because a salary hides costs your employer used to absorb: the employer half of FICA, health insurance, paid time off, equipment, software, and the hours you spend on sales and admin instead of billable work. A freelancer must recover all of it inside the billable hours alone — which is why a $50/hr-equivalent salary often needs a $90–120/hr freelance rate.
What is self-employment tax and why does it push my rate up?
Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) charged on 92.35% of your net earnings — roughly 14.1% of profit. As an employee you only paid half; your employer paid the other half. Self-employed, you pay both halves, so your rate has to cover it.
How many hours can a freelancer realistically bill per week?
Far fewer than 40. Sales, proposals, admin, invoicing, learning and downtime between clients are all unpaid. Most sustainable freelancers bill 50–60% of a full week — around 20–25 hours. Setting this number too high is the most common reason a rate that looks healthy still leaves you short.