What hourly rate should you charge as a freelancer?
$50/hour freelance ≠ $50/hour W-2. Self-employment tax, health insurance, and 30% non-billable time push the equivalent rate to ~$95/hour.
How the math works
The freelancer rate formula:rate = (target take-home + taxes + benefits + business costs) ÷ billable hours.
Two inputs people get wrong:
- Self-employment tax. 15.3% (both halves of FICA, vs the 7.65% W-2 employees see). On $100K of net SE income, that's $15,300 — separate from income tax.
- Billable hours. 2,080 is the W-2 default. Freelancers actually bill 1,000-1,400 hours/year because 30-40% goes to admin, marketing, proposals, professional development, and time off.
The combination — higher tax burden + fewer billable hours — is why a $50/hour W-2 rate translates to roughly $90-110/hour as a freelancer for the same after-tax take-home.
Math runs locally. Inputs never leave your browser.Source on github.
Real-world scenarios
- Why $40/hour as a freelancer is poverty wages: the salary-to-rate trap — what your employer was actually paying for you, plus the recovery formula.
- The 4-step pricing formula (and the project-rate conversion) — from take-home target to hourly rate to project quote, with worked example.
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Connect across dimensions
Real Hourly Rate
Your true pay after commute, prep time, and work expenses.
Self-Employment Tax
The 15.3% SS+Medicare on top of income tax that hits new freelancers. SS wage-base cap + 0.9% additional Medicare.
Side Hustle Income
What can you realistically earn from a side hustle after costs and taxes?
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Why $40/Hour as a Freelancer Is a 30% Pay Cut From Your Old Salary
$75K salary ÷ 2,080 hours ≠ $36/hour freelance equivalent. Bake in self-employment tax, lost benefits, and 35% non-billable time, and the equivalent rate climbs to $100/hour. Here's the breakdown.
The 4-Step Freelance Pricing Formula (with Project Rate Conversion)
Most freelancers pick a number that 'feels right.' The right number is a calculation: take-home target → required gross → billable hours → hourly rate. Plus the 20% scope-creep buffer that turns hourly into project rates.