What should you actually charge?
Most freelancers price off their old salary and quietly lose money. Your rate has to cover time you cannot bill, costs an employer used to absorb, and both halves of payroll tax.
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What you want in your pocket for the year, after tax. Not revenue — pay.
Software, hardware, insurance, accountant, coworking, travel. Everything an employer used to buy.
Hours a client actually pays for. For most freelancers this is 20–28, not 40.
Holiday, illness, admin, and the gaps between contracts. Nobody pays you for these.
Your call — we will not guess a bracket for you. Leave at 0 to see the pre-income-tax floor.
Charge at least
$83/hr
$659 per day · $2,058 for a full billable week.
What that rate has to cover
The hours behind it
A salaried job pays for 2,080 hours. You are billing 1,100 — which is why dividing an old salary by 2,080 produces a rate that loses money.
This is a floor, not a target. With income tax set to 0% the rate above covers your costs and self-employment tax and nothing else. Set a percentage you are comfortable with to see the rate that actually leaves you $70,000.
We do not hold a published Social Security wage base for 2026, so the self-employment tax line uses the most recent one we have.
Self-employment tax is calculated properly, including the 92.35% base and the Social Security wage cap. Income tax is whatever percentage you set — this page will not invent a bracket for you, because it depends on filing status, household income and deductions it cannot see.
Why dividing your old salary by 2,080 loses money
It is the first calculation nearly every freelancer does. Take the salary, divide by 2,080 working hours, add a bit for luck. A $90,000 salary becomes about $43 an hour, round it up to $50, done.
That number is wrong in three separate directions at once, and the errors compound.
- 2,080 hours are not billable. A salary pays you for every hour including the meetings, the admin and the two weeks you were on holiday. A client pays only for the hours you deliver. Realistically you bill 1,000 to 1,400 hours a year.
- Your employer bought things you now buy. The laptop, the software licences, the insurance, the accountant, the desk. That is thousands a year that used to be invisible.
- You now pay both halves of payroll tax. 15.3% instead of 7.65% — see the self-employment tax calculator for how that is built.
Corrected for all three, the same $90,000 lifestyle usually needs a rate somewhere north of $100 an hour. Freelancers who bill $50 because it felt like a raise are the ones working sixty-hour weeks and wondering where the money went.
Working backwards instead
The reliable method runs in the opposite direction: start from what you want to keep and work outwards to what you must charge.
- Take-home pay. What you want in your pocket for the year, after tax.
- Add tax. Self-employment tax on your net profit, plus whatever you set aside for income tax.
- Add business costs. Everything the business has to buy before it can pay you.
- Divide by billable hours. Hours per week you can genuinely bill, times the weeks you actually work.
The number people get wrong
Weeks off is the input most often understated. It is not just holiday. It is illness, the week between contracts, the fortnight a client went quiet, the days lost to proposals that went nowhere. Eight unpaid weeks is realistic for a busy freelancer; twelve is common. Every week you leave out makes your rate look lower than it needs to be, and you find out in the fourth quarter.
What to do with the result
Treat it as a floor, not a price. It is the rate at which you break even against the life you want — it contains no profit margin, no buffer for a bad year, and no premium for being good at your job. Pricing above it is how a freelance business becomes something other than a job with worse benefits.
Then check it against reality. A target rate only means something if your finished projects actually clear it, and they usually do not — the effective hourly rate calculator shows the gap between the rate you quoted and the rate you earned.
Common questions
- How do I convert my salary into a freelance rate?
- Not by dividing it by 2,080. That figure assumes every working hour is paid, which is true of a salary and false of freelancing. Start from the take-home pay you want, add the business costs an employer used to absorb, add both halves of payroll tax, then divide by the hours you can genuinely bill — usually 1,000 to 1,400 a year, not 2,080. The result is typically 50–100% higher than the naive conversion.
- How many hours a week can a freelancer actually bill?
- Between 20 and 28 for most people working full time. The rest of the week goes on finding work, writing proposals, invoicing, chasing payment, bookkeeping and the admin an employer used to handle. Planning for 40 billable hours is the single most common pricing mistake, and it produces a rate that is roughly 40% too low.
- Should my rate include tax?
- It has to. Nobody withholds anything on your behalf, so every dollar you invoice arrives gross and both self-employment tax and income tax come out of it later. A rate set against take-home pay without accounting for tax is a rate that will leave you short in April.
- Why does the calculator not fill in my income tax rate?
- Because it would have to guess. Income tax depends on your filing status, household income, deductions and the QBI deduction. Self-employment tax is calculated exactly here because it follows from net profit alone; income tax is a field you set, so you can see precisely what assumption your rate is resting on.
- Should I charge hourly, daily or a fixed price?
- The calculation is the same underneath — all three are an hourly rate with different packaging. Fixed price is the one that quietly breaks it: you commit to a number before knowing the hours, so scope creep comes directly out of your rate. If you quote fixed prices, check what past projects really earned with the effective hourly rate calculator before pricing the next one.
This is one number. Runway tracks all of them.
Runway compares this target against what your projects really earned, so you find out you underpriced before the next quote goes out.
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