Pricing your own freelance or consulting work is one of the hardest parts of going independent, and it is also the one that quietly sinks most new businesses. The trap is anchoring on what you used to earn as a W-2 employee, or on what you see other freelancers posting on social media. Neither number survives contact with self-employment tax, unpaid vacation, software subscriptions, health insurance, the slow weeks between clients, and the time you spend on sales, invoicing and bookkeeping.
This project rate calculator works the problem backwards. You tell it the salary you actually want to pay yourself, add a realistic overhead load, divide by the number of hours you can truly bill in a year, and it hands you the hourly, daily and weekly rate you need to charge. Use the number as a floor, not a ceiling: clients will negotiate, and knowing your floor means you never accept a project that loses money.
How to Use
- Enter your Desired Annual Take-Home Salary — the amount you want left in your bank account after business expenses, not the gross revenue you plan to invoice. If you are coming from a W-2 role, use your last net paycheck annualized, not your old base salary.
- Set Overhead & Tax Load as a percentage. For US freelancers this usually lands between 25% and 45%: it covers the 15.3% self-employment tax alone, plus retirement contributions, health insurance, software, and the quiet weeks when no one is signing a new SOW.
- Type your realistic Billable Hours per Year. A conventional 40-hour, 52-week job has 2,080 working hours, but freelancers typically bill only 60–80% of that — the rest goes to pitching, invoicing, continuing education and admin. The default 1,800 is optimistic; 1,200 is conservative.
- Add Fixed Annual Business Expenses for dedicated line items that are already quantified: annual insurance premiums, co-working rent, a signature CRM, or a yearly conference. Leave it at zero if your overhead % already covers these.
- Read the result card: Annual Revenue You Must Bill is the top of your funnel, Required Hourly Rate is your floor, and the day and weekly rates are what you quote when a client asks for a fixed project estimate.
The engine applies the standard build-up formula used by independent contracting studios: gross up your desired salary by the overhead percentage, add fixed expenses, then divide by billable hours.
The Project Rate Formula
Behind the slider is one equation, and it is worth understanding before you quote a client:
Hourly Rate = ((Desired Salary × (1 + Overhead%)) + Fixed Expenses) ÷ Billable Hours
Worked example on the default inputs: you want to take home $120,000, overhead is 25%, and you plan to bill 1,800 hours. The gross-up step gives $120,000 × 1.25 = $150,000 of required annual revenue. Divide by 1,800 hours and you need to bill $83.33 per hour. That is the number below which every hour you work loses you money relative to your plan.
Two intuitions fall straight out of the formula. First, raising billable hours lowers your required rate linearly: the same $150,000 spread over 2,000 hours becomes $75/hour, but spread over 1,200 hours becomes $125/hour. Second, overhead is multiplicative: a 50% load on a $120,000 salary means you have to bill $180,000 before you can pay yourself a cent. Most freelancers who under-price made one of those two errors.
How Billable Hours Actually Break Down
The 2,080-hour full-time number is a mirage once you work for yourself. A realistic 2,080-hour calendar year looks roughly like this:
- Two to four weeks of vacation — subtract 80–160 hours.
- Public holidays — roughly 80 hours.
- Sales, outreach and proposals — easily 200–400 hours.
- Admin: invoicing, bookkeeping, emails, invoicing follow-ups — 150–300 hours.
- Professional development, conference attendance, admin on stalled invoices — 100–200 hours.
That leaves 1,200–1,500 billable hours even for a disciplined solo operator. If you plug in 2,080 out of habit, your hourly rate will look comfortably low on paper and you will wonder why the invoices never cover the rent.
Pricing Fixed-Bid Projects
Once you know your hourly floor, converting to a fixed project bid is a three-step check: estimate the hours the project will actually take, multiply by your hourly rate, then add a 20–30% contingency for scope creep and revisions. A project you estimate at 40 hours at $83.33/hour is about $3,333 in direct labor; bid $4,200–$4,400 and you have priced in the first two rounds of edits and the three "small" additions the client will drop in week three.
Never quote a fixed number without running it through this floor first. A flat $5,000 website sounds exciting until you realize it will eat 80 hours of your time, which at your true floor should have been $6,700.
Examples
Example 1 — The default freelancer. Desired salary $120,000, overhead 25%, 1,800 billable hours, no separate expenses. Required revenue is $150,000/year, the hourly floor is $83.33, the suggested day rate is $666.67, and a 40-hour week bills out at about $3,333. If a client offers a 5-day sprint at $3,000, you are working below your floor.
Example 2 — Conservative solo operator. Desired salary $80,000, overhead 0% (simplified), 2,080 billable hours. Required revenue is $80,000 and the hourly floor is $38.46. This is the minimum you should ever quote — anything below means you are effectively paying your clients for the privilege of working.
Example 3 — Six-figure specialist. Desired salary $1,000,000, overhead 30%, 1,800 billable hours, plus $20,000 of fixed annual costs (executive assistant, insurance, tools). Required annual revenue is $1,320,000 and the hourly floor is $733.33. That sounds absurd until you remember that a partner at a consulting firm bills out at $500–$1,500 an hour to cover exactly this overhead stack.
FAQ
How do I calculate my project rate from a salary?
Multiply your desired annual salary by (1 + your overhead percentage), add any fixed annual business expenses, and divide by the number of hours you can actually bill in a year. The result is the hourly rate you must charge just to hit your salary target. For example, $120,000 × 1.25 ÷ 1,800 billable hours = $83.33 per hour.
What should I include in the overhead percentage?
Overhead stacks everything that is not direct project work but still costs money: self-employment tax (15.3% in the US), federal and state income tax above that, health and dental insurance, retirement contributions, software subscriptions, professional liability insurance, co-working or home-office allocation, continuing education, and the unpaid time you spend selling, invoicing and following up on late payments. A safe default for US solo freelancers is 25–40%.
How many billable hours should I plan for?
Most freelancers bill between 1,200 and 1,800 hours per year, not the 2,080 of a full-time employee. The difference is vacation, holidays, sales calls, proposals, invoicing and admin. If you assume 2,080, your required hourly rate will look artificially low and you will under-bid every project. New freelancers should start with 1,200 and only raise the number once they have two years of invoicing history to prove it.
How do I convert an hourly rate to a day rate?
Multiply your hourly rate by eight. If your floor is $83.33/hour, your day rate is about $667. When a client asks for a five-day engagement, quote roughly $3,335 before any contingency. Always quote the day rate from your computed hourly floor, not the other way around — anchoring on a day rate you heard from a peer skips the overhead math that actually pays your bills.
Should I charge more than the calculator's number?
Yes. The calculator gives you a break-even floor, not a market price. Raise the rate when you have a specialty in short supply, when the client has a hard deadline, when the work is high-risk or regulated, or when you are replacing a full-time employee for them. Many freelancers intentionally price 20–50% above the computed floor and then discount selectively to win strategic clients, rather than starting at the floor and negotiating downward.
What is the difference between an hourly rate and a project rate?
An hourly rate invoices the time you spend; a project rate invoices a delivered outcome. Most freelancers compute an hourly floor first, then estimate how many hours the project will take, multiply by the floor, and add a 20–30% contingency for scope creep. That project number is your fixed bid. If a project will take 40 hours at $83.33/hour, bid $4,200–$4,400 — not $3,333 — so the first two revision rounds do not eat your profit.
Is this calculator accurate for contractors outside the US?
The formula is universal, but the overhead percentage must reflect your local tax and benefits regime. In the US, self-employment tax alone is 15.3%; in the UK, IR35 and VAT rules change the math; in the EU, VAT registration and mandatory social contributions layer on top. Treat the 25% default as a US baseline and adjust the overhead slider until it matches your own tax bill.
Disclaimer
This project rate calculator is provided for informational purposes only and does not constitute tax, legal, or business advice. The recommended hourly, daily and weekly figures are estimates derived from the inputs you enter; actual self-employment tax brackets, deductions, insurance premiums and market rates vary by location, specialty, experience and client mix. Consult a licensed accountant and a business attorney before setting prices, registering as an LLC, or signing a long-term contract.