When I started freelancing, I made the classic mistake: I took my old salary and divided by working days.
£50,000 / 260 days = £192/day. Easy.
Wrong. That calculation ignores tax, National Insurance, pension, holidays, sick days, admin time, equipment, insurance, and the fact that you won't bill every working day.
Here's the real formula.
The actual calculation
Start with your target take-home. Not salary — what you actually want in your pocket after everything.
Then add:
- Income Tax (20% on £12,571–£50,270, 40% above)
- Class 2 NI (£3.45/week)
- Class 4 NI (6% on £12,570–£50,270)
- Pension contributions (if you're smart)
- Business insurance (£300–£1,000/year)
- Software and equipment (£500–£2,000/year)
- Accountant (£150–£400/year)
Then divide by actual billable days. Not 260. More like 200–220 after holidays, sick days, and admin.
The difference is massive
Using the naive calculation: £192/day.
Using the real calculation with the same £50k target: £280–£350/day, depending on your expenses.
That's a 45–80% difference. Underprice by that much and you're subsidising your clients with your own pension.
Use this instead
I built a free day rate calculator that handles all of this. Enter your target income, tax situation, expenses, and working pattern — it shows you the real number.
Also useful:
- Freelance tax calculator — full breakdown of what HMRC takes
- Profit margin calculator — what you actually keep per invoice
The uncomfortable truth
Most freelancers undercharge because they're scared of losing work. But here's the thing: clients who won't pay your real rate aren't clients worth having. They're the ones who also pay late, argue about scope, and ghost you when the invoice lands.
Charge what the maths says. The right clients will pay it.
All tools at landolio.com/tools — free, no signup, no tracking.
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