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.
What hourly rate do I need to charge as a freelancer?
Work backwards from take-home, not forwards from a market rate. Gross up your target for self-employment tax and income tax, add business expenses and health premiums to get required revenue, then divide by the hours you can actually bill — which is far fewer than the hours you work, because selling and admin are unpaid.
- Self-employment tax is 15.3% × 92.35% ≈ 14.13% of profit. Required pre-tax profit = take-home ÷ (1 − 14.13% − your income tax rate).
- Worked example (defaults on this page): to keep $100,000 at an 18% effective rate you need $147,340 of profit and $165,940 of revenue after $12,000 expenses and $6,600 of premiums.
- At 25 billable hours a week for 48 weeks — 1,200 billable hours — that is $138/hr, or about $1,106 a day.
- Only about 60 cents of each dollar invoiced reaches your pocket on those inputs. Quoting an employee salary ÷ 2,080 hours is the classic error: it ignores tax, overhead and unbillable time all at once.
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.