Why freelancers underprice
The classic mistake: "I made $60,000 as an employee, that's about $30/hour, so I'll charge $30." This ignores three brutal realities of self-employment: you now pay both halves of taxes and all your own benefits, you can't bill every hour (admin, sales, and marketing are unpaid), and you have no paid time off. Charging your old salary rate is a fast route to earning far less while working more.
How the real rate is built
This calculator works backwards from what you want to keep. It grosses up your target income to cover taxes and benefits, adds business expenses, then divides by your billable hours — not total hours. Compare the result to the "naive rate": the honest number is typically 50–100% higher. That gap is exactly what underpriced freelancers lose.
Billable hours: the number that surprises people
A 40-hour week rarely yields 40 billable hours. Between finding clients, invoicing, email, and admin, 20–30 billable hours is realistic for many solo freelancers. Fewer billable hours means each one must cost more to hit your goal — which is why "I'll just work more hours" isn't the same as "I'll earn more."
Beyond the minimum
- This is your floor, not your price. It's the rate to break even on your goal — value-based pricing can go well above it.
- Raise rates with experience. Your first rate shouldn't be your rate three years and a portfolio later.
- Consider project pricing. Charging for outcomes rather than hours often pays better and rewards efficiency instead of penalising it.
Price to sustain the business you actually run — taxes, gaps, downtime and all — not the salaried job you left behind.