I built a freelance rate calculator — here's the formula most freelancers get wrong

Prod Yard — Thu, 23 Apr 2026 13:20:03 +0000

When I started freelancing, I did what most people do: I took my old salary, divided by 2,080 hours (40h × 52 weeks), and used that as my hourly rate.

That was a $30,000/year mistake.

Here's why — and the formula I wish someone had shown me on day one.

The 3 hidden costs employees don't pay

When you're employed, your employer covers a lot of costs you never see. Go freelance, and they all land on you:

1. Self-employment taxes & insurance (25-35%)

As an employee, your employer pays half your Social Security and Medicare taxes (7.65%), plus health insurance, retirement matching, and workers' comp. As a freelancer, you pay all of it.

For a $70,000 take-home target, you actually need to gross $100,000 just to cover taxes and insurance.

2. Business overhead (10-20%)

Software subscriptions (IDE, design tools, project management), equipment, a workspace, accounting fees, professional development. These add up to $5,000-15,000/year that your employer used to cover.

3. Non-billable time (25-40%)

This is the one that kills you. Between finding clients, writing proposals, invoicing, emails, bookkeeping, and admin — most freelancers only bill 60-75% of their working hours.

A 40-hour week might only yield 28-30 billable hours.

The actual formula

Working weeks = 52 - (vacation_days / 5) - (sick_days / 5)
Total hours = working_weeks × hours_per_week
Billable hours = total_hours × billable_percentage
Pre-tax needed = desired_income / (1 - tax_rate)
With overhead = pre_tax_needed × (1 + overhead_rate)
Hourly rate = with_overhead / billable_hours

Let's run the numbers for $70k take-home:

Factor	Value
Desired take-home	$70,000
Tax + insurance (30%)	+$30,000
Overhead (15%)	+$15,000
Annual gross needed	$115,000
Working weeks (15 vacation + 5 sick days)	48
Hours/week	40
Billable %	70%
Billable hours/year	1,344
Required hourly rate	$86/h

Compare that to the naive calculation: $70,000 ÷ 2,080 = $34/h.

That's a 2.5x difference. At $34/h, you'd actually take home about $27,000 — less than half your target.

How rates vary by profession

Profession	Entry	Typical	Senior
Web Developer	$50/h	$95/h	$175/h
Graphic Designer	$35/h	$65/h	$120/h
Copywriter	$30/h	$65/h	$150/h
Video Editor	$30/h	$60/h	$130/h
Marketing Consultant	$50/h	$100/h	$200/h
Social Media Manager	$25/h	$50/h	$100/h
Bookkeeper	$25/h	$42/h	$75/h
Writer	$25/h	$50/h	$100/h

Try it yourself

I built a free calculator that does all this math for you — plug in your numbers and it shows your rate instantly:

Freelance Rate Calculator

It also has pre-filled versions for web developers, graphic
designers, copywriters, and 5 other professions.

No signup, no email gate — just a calculator.

TL;DR

Don't divide your salary by 2,080. You'll undercharge by 2-3x.
Account for taxes (25-35%), overhead (10-20%), and non-billable time (25-40%).
Most freelancers need to charge $60-100/h to match a $70k salary.
Use a rate calculator to find your actual number.

DEV Community: Prod Yard