Your salary has benefits. Your rate must cover them.
Find the hourly number that actually sustains you.
Never quote below your survival rate. The growth rate funds savings, slow months, and reinvestment.
The most common pricing mistake in freelancing is dividing a former salary by 2,080 hours and calling it a rate. That math ignores three realities: you will not bill 40 hours a week (20–25 is typical once you count sales, admin, and gaps between projects), you pay both halves of payroll tax, and nobody is funding your health insurance, retirement, or paid vacation. The result: a rate that feels fine until the slow month arrives.
Step 1 — start from take-home, not salary. Decide the annual take-home pay you actually need to live on.
Step 2 — gross it up for taxes. Divide by (1 − your effective tax rate). At 25% tax, $70,000 take-home means ~$93,333 in gross income.
Step 3 — add real expenses. Software, hardware, coworking, insurance, accountant, platform fees. Most freelancers land between $3,000 and $10,000 a year.
Step 4 — divide by honest billable hours. Billable hours per week × weeks you actually work (subtract vacation and expected slow periods).
The result is your survival rate — the floor below which you are losing money. Add a 20–30% margin for the growth rate: savings, retirement, and buffer.
What is a good billable-hours target? For full-time freelancers, 20–25 billable hours per week is realistic and sustainable. Above 30, burnout risk climbs fast.
How do I handle taxes as a freelancer? In the U.S., set aside 25–30% of profit for federal income + self-employment tax (15.3% on the first $176,100 of net earnings in 2025), and pay quarterly estimated taxes to avoid penalties.
Should I charge different rates per client? Yes — rate cards can vary by project type, urgency, and client size. Your survival rate is the floor for all of them.
Disclaimer: simplified model for planning. Tax situations vary — talk to an accountant before setting final rates.
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