Freelance Hourly Rate & Project Price (After Tax & Utilization)
Turn your target income into a realistic freelance rate and project price
Freelance pricing FAQs
Is utilization the same as availability?
No. Availability is how many hours you could work; utilization is the share of working hours that actually bill clients after admin, sales, marketing, and learning. Many solo freelancers discover that 50–70% utilization is a realistic long-term target.
Should I include software and annual tools?
Yes. Put all recurring tools, insurance, hosting, and other business costs into annual expenses, so your hourly rate quietly pays for them even in slower months. If a cost is required to serve clients, it belongs in the expense number.
How do I price retainers with this?
Estimate the number of hours per month, multiply by your hourly rate, add a buffer if the workload is variable, and include an overage rate for additional hours. Retainers are simply projects that repeat each month with an agreed scope and capacity.
What if clients compare me to much cheaper rates?
Use the breakdown to explain what your rate includes: taxes, tools, prep, and non-billable work that keeps projects running smoothly. If someone undercuts you dramatically, it usually means they’re ignoring one of these factors—or they’re not sustainable long-term.
How often should I refresh my numbers?
Recalculate after major changes: rent increases, new software, tax bracket shifts, or a move to a different schedule. Many freelancers review their rate once or twice a year and nudge it upward as demand and skill grow.
How to use this freelance rate and project pricing calculator
1. Start from your real revenue need
The calculator works backwards from the life you want to fund. You pick a target personal income, add your yearly business expenses, and enter an effective tax rate on profit. Instead of tacking tax on at the end, the tool divides by (1 − tax%) to find the revenue you must invoice so that, after tax and costs, you still take home your target—expressed here in USD.
2. Be honest about holidays and non-billable time
Weeks off include public holidays, vacation, sick time, and dry spells between projects. Hours per day should reflect a sustainable workday, not emergency crunch. The utilization percentage represents the share of those hours that bill clients after admin, marketing, sales calls, proposals, bookkeeping, and learning. Most steady solo pros land somewhere between 50% and 70% utilization across a year.
3. Turn that into a defendable hourly and day rate
Once the calculator knows your required revenue and realistic billable hours, it computes a base hourly rate and day rate that already contain your taxes, expenses, and a reasonable workload. This number is not arbitrary: it’s the minimum you need to sustain your practice. You can round it to neat steps (for example to the nearest 5 or 10) so your rate card looks clean while staying grounded in real math.
4. Price projects with a built-in safety buffer
For each project, you estimate billable hours. The calculator multiplies this by your hourly rate and then applies a buffer percentage to account for scope creep, extra meetings, and rounds of review. If a client needs a hard cap, keep the buffer inside your price and protect scope in writing. When uncertainty is high, quote a range or start with a smaller paid discovery block.
5. Use the breakdown to communicate your value
The copy-ready summary shows target income, expenses, required revenue, working weeks, billable hours, and project pricing in USD. You can adapt this into an internal rate card or share a simplified version with clients who ask why your price is higher than a bare hourly number on a job board. The point isn’t to defend every line item; it’s to show that your rate is designed for sustainability.
6. Practical tweaks to improve your margins
If the resulting rate feels too high for your market, you have three main levers: lower fixed expenses, improve utilization (for example by batching meetings and templating proposals), or adjust your target income until demand justifies a higher rate. Over time, track actual hours by phase so your estimates and buffer become more accurate, and revisit the calculator as your business evolves.
Formula snapshot: from target income to hourly rate
Let Y be your target personal income and E your annual
business expenses. With an effective tax rate t (as a decimal), required revenue
R is:
R = (Y + E) ÷ (1 − t)
With w weeks off, d workdays per week, and h hours per day, annual working hours H = (52 − w) × d × h. If your billable utilization is u (as a decimal), billable hours B = H × u.
Base hourly rate r = R ÷ B. A typical day rate is
Day rate = r × h. For a project with q billable hours and
buffer b (decimal), the price is:
Project price (with buffer) = r × q × (1 + b)
These simple relationships keep your pricing disciplined and transparent. The calculator just automates the arithmetic and formats the output into a rate card you can actually use.