About

New freelancers often make the mistake of dividing their desired annual salary by 2,080 (the standard 40-hour work week). This formula leads to burnout and poverty. A sustainable rate must account for unbillable time (marketing, admin, invoicing) and overhead expenses (software, insurance, self-employment tax).

This tool acts as a financial coach. It separates your "production" hours from your "business" hours to find the true Effective Rate. It allows you to input recurring monthly expenses and estimates tax liabilities using simplified brackets for the US, UK, and Canada, ensuring your net take-home pay matches your lifestyle goals.

Formulas

The required hourly rate R is calculated by summing Desired Net Salary N, Expenses E, and Taxes T, then dividing by Billable Hours H_b.

R = N + E + TH_b

Billable Hours are calculated by deducting holidays and unbillable admin time:

H_b = (52 − Weeks_off) × Hours_week × %_billable

Reference Data

Factor	Traditional Employee	Freelancer / Consultant
Paid Hours/Year	2,080 (Fixed)	1,000 - 1,500 (Variable)
Tax Burden	Employer pays ~7.65% (FICA)	You pay ~15.3% (SE Tax)
Overhead	Provided by company	Paid by you (Software, Laptop)
Benefits	Health, 401k, PTO	Paid out of pocket
Effective Rate	$50/hr → $50/hr	$50/hr → ~$28/hr (Net)

Frequently Asked Questions

Most successful consultants only bill 50% to 60% of their working time. The remaining 40% is spent on business development, accounting, emails, and skill maintenance. If you plan to work 40 hours a week, assume only 20-25 are billable.

Freelancers pay both the employee and employer portion of social security/medical taxes (Self-Employment Tax in the US). Without an employer withholding taxes, you must generate enough gross revenue to cover this liability yourself.

Yes, this tool uses your browser's LocalStorage to remember your expense list and salary goals so you don't have to re-enter them on your next visit.