Freelance Rate Calculator
One number to start
What W-2 salary are you replacing? We price everything an employer quietly paid for — and the hours nobody pays a freelancer for.
Your current or target W-2 gross salary — benefits get added on top automatically
How we calculate this
This is a salary-replacement model. Instead of guessing at your future tax return, it prices exactly what changes when you leave W-2 life: the employer's half of payroll tax (now yours, via self-employment tax), the health insurance and retirement match your employer quietly paid, your business expenses, and — the one everyone underestimates — the hours nobody pays a freelancer for.
The math solves for the net profit where you break even with your old package: profit minus self-employment tax must equal your salary after employee-side FICA, plus the benefits you now buy yourself. Self-employment tax uses the IRS rule the whole site shares — 15.3% applied to 92.35% of profit, both halves of Social Security and Medicare. Add business expenses to get required revenue, divide by your billable hours, and that's your floor rate.
Why we can ignore income tax: it very nearly cancels between the two lives, and not by accident. Self-employed health premiums, half of your SE tax, and solo-401(k) contributions are all deductible before income tax. In the worked example below — replacing a $95,000 salary — the freelancer's required profit is $117,018, but after deducting half the SE tax ($8,267), health premiums ($8,951), and the self-funded retirement match ($3,800), taxable income lands at about $96,000: within roughly $1,000 of the W-2 salary it replaces. The QBI deduction, which we don't even count, usually tips the comparison in the freelancer's favor.
What we don't model: the Social Security wage-base cap (rates for $180k+ targets come out slightly conservative), state tax differences, and the ACA premium subsidies that can lower your real insurance cost. All of it is listed in the assumptions panel next to your result.
Real scenarios
Replacing a $95k package: $104/hr, not $46
A designer replacing a $95,000 salary with typical benefits (single-coverage insurance, 4% match, $200/mo expenses) at 60% billable time needs about $104/hr. Divide $95,000 by 2,080 hours and you get $46 — charge that as a freelancer and you've taken an enormous pay cut without noticing. The gap is benefits, both halves of FICA, and 1,152 real billable hours instead of 2,080.
Lean setup, fewer hours: $60k still needs $86/hr
A consultant on a spouse's health plan with no match to replace and no expenses, working 30 hours a week at 50% billable with two weeks off, has just 750 billable hours a year. Replacing a $60,000 salary takes about $86/hr — proof that low overhead doesn't rescue a thin billable schedule.
Billable share is the real lever
Take the $95k designer again. At 75% billable (1,440 hours), the required rate drops to about $83/hr. At 50% billable (960 hours), it jumps to about $124/hr. Moving your billable share ten points does more to your rate than any expense line — track it before you negotiate it.