Self Employed Rate Calculator

Self-Employed Hourly Rate Calculator

The "take-home" pay you want after taxes and expenses.

Software, insurance, hardware, marketing, etc.

Self-employment tax plus income tax.

Actual hours you can charge to clients.

Weeks you won't be working at all.

Calculation Results:

Required Hourly Rate: $0.00

Required Daily Rate (8h): $0.00

To achieve your goals, your gross annual revenue must be: $0.00

function calculateFreelanceRate() { var desiredNet = parseFloat(document.getElementById('desiredNet').value); var annualExpenses = parseFloat(document.getElementById('annualExpenses').value); var taxRatePercent = parseFloat(document.getElementById('taxRatePercent').value); var billableHours = parseFloat(document.getElementById('billableHours').value); var weeksOff = parseFloat(document.getElementById('weeksOff').value); if (isNaN(desiredNet) || isNaN(annualExpenses) || isNaN(taxRatePercent) || isNaN(billableHours) || isNaN(weeksOff)) { alert("Please fill in all fields with valid numbers."); return; } // Calculation Logic // 1. Gross income needed = (Net + Expenses) / (1 – TaxRate) var taxDecimal = taxRatePercent / 100; var totalGrossNeeded = (desiredNet + annualExpenses) / (1 – taxDecimal); // 2. Total working weeks var workingWeeks = 52 – weeksOff; if (workingWeeks <= 0) { alert("Vacation weeks cannot be 52 or more!"); return; } // 3. Total annual billable hours var totalAnnualHours = workingWeeks * billableHours; // 4. Hourly Rate var hourlyRate = totalGrossNeeded / totalAnnualHours; var dailyRate = hourlyRate * 8; // Display Results document.getElementById('hourlyOutput').innerText = "$" + hourlyRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('dailyOutput').innerText = "$" + dailyRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('grossOutput').innerText = "$" + totalGrossNeeded.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('rateResult').style.display = "block"; }

How to Calculate Your Self-Employed Rate

Transitioning from a traditional 9-to-5 to self-employment requires a fundamental shift in how you view your "salary." When you are your own boss, your hourly rate must cover much more than just your time. It must account for overhead, taxes, and non-billable hours.

The Components of a Sustainable Rate

To ensure your business is profitable and you aren't working for less than minimum wage after expenses, you must factor in the following:

• Desired Net Income: This is what you actually want to have in your bank account at the end of the year to pay for your personal life.
• Business Expenses: Unlike employees, freelancers pay for their own laptops, software subscriptions (Adobe, Office, CRM), health insurance, and office space.
• The "Tax Bite": In most regions, self-employed individuals pay both the employer and employee portion of social security/healthcare taxes, plus standard income tax.
• Billable vs. Non-Billable Time: You cannot bill for 40 hours a week if you spend 10 of those hours on marketing, invoicing, and lead generation. Most freelancers find that 20–30 hours per week is the realistic "billable" limit.

The Formula Used in This Calculator

The logic behind our tool follows the "Reverse Gross-Up" method:

Hourly Rate = [ (Desired Net + Expenses) / (1 – Tax Rate) ] / (Working Weeks × Billable Hours)

Realistic Example

Imagine a Graphic Designer who wants a net "salary" of $50,000.

• Annual Expenses: $6,000 (Software, hardware, coffee, internet)
• Tax Rate: 30% (Combined)
• Billable Hours: 25 per week (The rest is spent on design trends and finding clients)
• Time Off: 4 weeks (Vacation and sick leave)

Step 1: Total Gross Revenue needed = ($50,000 + $6,000) / 0.70 = $80,000.

Step 2: Working weeks = 48. Total billable hours = 48 weeks * 25 hours = 1,200 hours.

Result: $80,000 / 1,200 hours = $66.67 per hour.

Frequently Asked Questions

Should I charge by the hour or by the project?
While this calculator gives you an hourly baseline, many experts recommend "Value-Based Pricing" for projects. However, you should always know your hourly floor to ensure the project fee doesn't drop your effective rate below your needs.

What is a typical self-employment tax rate?
In the United States, self-employment tax is 15.3%, plus your standard federal and state income tax. It is common for freelancers to set aside 25-35% of their total gross revenue for taxes.

Why is my calculated rate so much higher than my old salary?
When you were an employee, your employer paid for your desk, your healthcare, your half of FICA taxes, and your 401k match. As a business owner, you are now the employer, so you must "pay" yourself those benefits out of your gross revenue.