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Calculating Your Freelancer Rate

Over the years one of the most common questions we get is “how do I calculate my rate?”

The method we recommend is three a prong approach:

  1. Calculate what it costs you to live.
  2. Calculate what your “all-in” full-time salary was.
  3. Calculate what you want to be making.

Cost to Live

The objective here is to calculate how to keep your current lifestyle while working as a freelancer. To compare apples to apples, create a spreadsheet with all expenses you incur throughout the year. Keep in mind the following:

● Consider any health or home expenses you must budget for in the coming years.

● Factor in ongoing expenses for your freelance practice; for example, subscriptions, technology, and general liability insurance.

● Account for HSA account savings, or health reimbursements that you might be losing.

● Include what you contribute to your health insurance

Once this number is complete, multiple it by 15% to cover anything you might have forgotten.

$76,000 x 1.15 = $87,400

Multiply this number by the average percentage of taxes you owe based on your tax bracket.

$87,400 x 1.23 = $107,502

This number is the absolute floor of what you can be making as a freelancer.

Floor = $107,502 per year

I would recommend leaving start-up costs out of this budget. Often these costs can be treated as a write off or you can amortize them over several years.

Income as a Fulltime Employee

The objective here is to calculate your total income, including employer costs and provided benefits. Create a section of your spreadsheet that shows annual salary as well as estimated bonuses or commissions. Add to this number any employer costs that will now need to be covered by your income.

● Health insurance coverage

● Childcare benefits

● 401K matching

● Mileage, travel costs, metro pass, etc.

This number will equal your total income as a full-time employee. A “comfortable” income would be this number multiplied by 20% to account for savings and fluctuations in income.

Total Income = $110,000 means “Comfortable” = $132,000

Income Goal

Now this is the fun part, for you to accomplish some of your financial goals, what do you want to be making? Do you want to be saving more, traveling more, or simply having more fun? Make this number only 80% believable, stretch yourself a bit!

Goal = $160,000

Put it Together

As a rule, never use 52 weeks a year as a multiple to calculate your rate. To create a sustainable and prosperous freelance practice you need to factor in at a minimum sick and vacation time. I would challenge you to take this one step further and factor in the weeks you might not be working. For example, maybe you estimate 1 week of sick time, 2 weeks of vacation, and 4 weeks of being in between projects; bringing you to a multiple of 45 weeks per year.

The above grid will serve as your guide. It is not in your best interest to take projects at and especially not lower than your “floor” and ideally all of your projects are at or above your “goal.”


Cost of Living

A lot of people have moved out of big metropolitan areas over the last several years. Cost of living should be factored into your rates, or you run the risk of pricing yourself out.


The numbers above only loosely factor in tax implications. This is really meant to be a baseline for you to discuss with your accountant. Your tax accountant will also be able to help guide you not just on your new tax liability but on where you can take write offs as a small business owner.

Staffing Services

Leveraging online platforms to compare your work product and rates to comparable talent, take into consideration how the platform is getting paid.

Software and Programs

When you’re calculating your rates also take into consideration any expenses like software, scheduling platforms, invoicing systems, etc that you use daily for your business. These are likely costs that you are covering for a client and should be factored into your rates.


Consider your continuing education in the field. Clients are paying not just for the time you’re spending now, but the time you have invested to learn your trade, and the time you continue to invest. Our industries are constantly evolving, so factor in educational expenses as well when calculating your rates.