How to Calculate Your Freelance Rate (The Right Way)
Most freelancers undercharge because they simply divide their desired salary by 2,080 hours. This is a massive mistake. You must account for taxes, business expenses, and the reality that you cannot bill 40 hours a week.
The Formula We Use:
- Gross Income Needed: We take your desired net income, divide by (1 - your tax rate), and then add your annual expenses. Expenses are pre-tax deductions, so they are not multiplied by the tax rate.
- Realistic Hours: We calculate your total working weeks (52 minus vacation) and multiply by realistic billable hours. Admin, marketing, and emails take up at least 30% of your time.
Use this calculator to find your baseline. Always remember that your rate is a business decision, not just a math equation.