๐ผ Freelance Rate Calculator
This is only an estimate. Actual taxes and social insurance costs vary by individual circumstances.
Enter your desired take-home income, annual business expenses, the percentage you want to set aside for taxes and social insurance, and your annual working days and hours per day, to reverse-engineer the day rate and hourly rate you need to charge. Answers the question: "what do I need to charge to actually take home what I want?"
How to use
- Enter the take-home annual income you want to end up with.
- Enter your annual business expenses (equipment, internet, etc.).
- Enter the percentage of income you want to set aside for taxes and social insurance.
- Enter your annual working days and hours worked per day โ the required day rate and hourly rate are calculated automatically.
How the calculation works
This tool works back from the take-home income you want to the revenue you need, then to a daily and hourly rate. Required annual revenue = (desired income + annual expenses) รท (1 โ tax and insurance reserve rate) Day rate = required annual revenue รท working days per year Hourly rate = day rate รท working hours per day Unlike employees, freelancers and sole proprietors do not have tax and social insurance deducted from their pay, so they need to set part of their revenue aside for them. The reserve rate is the share of revenue put aside for taxes and social insurance. The calculation makes sure the revenue left after the reserve covers both your desired income and your expenses.
Worked example
Desired income ยฅ6,000,000, annual expenses ยฅ600,000, reserve 30% Required annual revenue: (6,000,000 + 600,000) รท (1 โ 0.3) โ ยฅ9,428,571 200 working days a year, 8 hours a day Day rate: 9,428,571 รท 200 โ ยฅ47,143 Hourly rate: 47,143 รท 8 โ ยฅ5,893 Dividing the desired income alone by working hours gives ยฅ3,750, so allowing for expenses and tax requires a rate about 1.6 times higher.
Things to be aware of
- For a realistic rate, leave out of your working days the time spent on sales, quotes, invoicing and learning, which does not earn revenue directly.
- Freelancers do not get the employee pension, severance pay or paid leave that employees do, so factor those into your desired income.
- Actual tax depends heavily on income and deductions. Once you are trading, revisit the reserve rate using your tax return estimates or advice from a tax accountant.
FAQ
What's the logic behind this calculation?
It computes "(desired income + expenses) รท (1 โ reserve percentage)" to work out the gross annual revenue you need before taxes, social insurance, and expenses are taken out, then divides that by your working days and hours to get the day rate and hourly rate.
What reserve percentage should I use?
Many freelancers set aside roughly 20-35% of income to cover income tax, local tax, health insurance, and pension contributions, but this varies a lot based on income level and deductions. Check with an accountant or your own tax filing for an accurate figure.
How should I decide on working days?
Start from the total days in a year and subtract weekends, holidays, paid time off, and days spent on sales or admin work rather than billable work โ the goal is an honest estimate of days that actually generate income.