Freelance Rate Calculator
| Target income | Base rate (60% util) | Loaded rate (+25% overhead) | Employee-equivalent |
|---|---|---|---|
| $50,000 | $40/hr | $50/hr | $24.04/hr |
| $75,000 | $60/hr | $75/hr | $36.06/hr |
| $100,000 | $80/hr | $100/hr | $48.08/hr |
| $150,000 | $120/hr | $150/hr | $72.12/hr |
| $200,000 | $160/hr | $200/hr | $96.15/hr |
The freelance rate conversation keeps failing because it compares a $100/hr freelancer to a $100k salaried employee - and they are not the same number. The real chain: only about 60% of a freelancer's hours actually invoice (sales, admin, and the invisible unpaid half eat the rest), self-employment carries roughly 25% in taxes and overhead that an employer otherwise pays, and only then does the target income divide into a rate. A $100,000 target is an $80/hr base rate - and $100/hr loaded.
Bottom line: the loaded rate is the honest one, and the employee-equivalent column is the mirror that keeps it honest - a $100/hr freelancer earns roughly what a $48/hr employee does. If that comparison stings, the rate was too low; if it comforts, charge more anyway, because utilization never hits the plan.
The honest part: the arithmetic is self-evident calendar math (2,080 hours x utilization, plus the overhead multiplier) - no authority is cited because none is needed. The only judgment input is your utilization, and the dropdown's three settings (50% heavy admin, 60% typical, 70% booked solid) bracket every honest answer.
How to use
- Set your target yearly income (what you want to clear, not what you want to bill) and your realistic utilization.
- Read the loaded rate as the quote: the base rate ignores the 25% overhead-and-tax layer that self-employment charges you, so quoting base is a discount you volunteer.
- Use the employee-equivalent number for the dinner-table comparison - it is the salary your rate actually matches, after the freelance discount stack.
Frequently asked questions
How do I calculate my freelance hourly rate?
Target income divided by billable hours, where billable hours are 2,080 times your utilization - at the typical 60%, that is 1,248 hours, so a $100,000 target starts at $80/hr. Then add the overhead layer: multiply by 1.25 for self-employment tax, insurance and software, which puts the honest quote at $100/hr. The calculator runs both numbers so the discount is visible.
What is a good utilization rate for a freelancer?
Sixty percent is the realistic middle: about a quarter of the workweek goes to sales, admin, marketing and the bookkeeping nobody bills for, and the rest is genuinely unbillable time. Booked-solid veterans touch 70%; anyone who claims 85% is not counting the marketing that makes the 85% possible. Choose honestly - the whole calculation is only as good as this input.
Why is freelance pay higher than employee pay?
Because the freelancer is the whole company: the rate must cover the employer's half of payroll taxes, health insurance, retirement, equipment, software, unpaid time off, and the bad-debt fund for clients who pay late or never. The 25% overhead multiplier in the loaded rate is the conservative version of that stack - which is why matching your old salary hourly is taking a pay cut.
What is the employee-equivalent of my rate?
Target income divided by 2,080 - the salary the rate actually delivers once the freelance discount stack is paid. The table shows the gap plainly: $100/hr loaded is the equivalent of about $48/hr employed. Use it in both directions: freelancers use it to stop underpricing, and hiring managers use it to see why good contractors price where they do.