Calculate the minimum billable hours or revenue needed each month to cover all your freelance business costs.
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Every freelancer has a minimum number — the revenue below which they're losing money. Not knowing this number is like running a business blindfolded. Break-even analysis gives you that number.
Your break-even revenue equals your fixed monthly costs divided by (1 minus your variable cost rate). If you have $3,000 in fixed costs and 10% variable costs, you need $3,333 in revenue to break even.
Converted to hours: at $75/hr, that's roughly 44 hours per month — about 11 hours per week. Anything above that generates profit. Below that, you're in the red.
This number has practical implications: it's your minimum monthly target, it tells you which projects are worth taking (any project priced below break-even cost per hour loses you money), and it defines your financial floor for evaluating slow months versus crisis months.
Review your break-even every quarter. As expenses change or rates increase, your break-even threshold shifts. The goal over time is to increase your rate faster than your expenses, widening the gap between break-even and your actual earnings.
Break-even Point
The minimum revenue or billable hours a freelancer must achieve to cover all business costs without profit or loss.
Overhead
The fixed business costs a freelancer incurs regardless of how much client work they do — rent, software, insurance, and other ongoing expenses.
Profit Margin
The percentage of revenue that remains as profit after deducting all business expenses — a core measure of freelance business health.
Personal expenses you must pay regardless of income: rent/mortgage, utilities, groceries, debt payments. Business expenses: software subscriptions, insurance, phone, accountant. Don't include your desired profit or retirement savings — those come after break-even.
Your break-even is the floor below which you're losing money. Knowing it helps you evaluate whether to take low-paying work in slow months, set your minimum project rate, and understand how many hours per month you absolutely must bill.
Costs that scale with revenue or project volume: payment processing fees (Stripe/PayPal: 2.9%), direct project expenses you pay upfront, subcontractor fees when you outsource work, and any commission arrangements.
Set it as your 'don't panic' threshold. If you earn above break-even in a month, you're covering costs even if you're not yet profitable. It also tells you the minimum project rate — any work priced below your hourly break-even rate costs you money.
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