Convert your employee salary to the freelance hourly rate you need to charge to match your current compensation. Accounts for SE tax, benefits, and unpaid vacation.
Invoicing, Tax & Tools
Bill clients, track time, and file taxes — software built for the self-employed
The most common mistake new freelancers make: dividing their annual salary by 2,080 hours (52 weeks × 40 hours) and setting that as their hourly rate. This math is dangerously wrong.
What your employer actually pays for you
If you earn $80,000, your employer's total cost for you is typically $95,000-$110,000 when you include:
The billable hours problem
You don't bill 40 hours per week as a freelancer. Plan for 25-30 billable hours. The rest goes to admin, business development, invoicing, client communication, professional development, and the reality of sick days and slow weeks.
The calculation
Take total compensation you need to replace → add SE tax extra → add business overhead → divide by realistic billable hours. The result is your break-even rate. Add 15-25% for profit and slow-month buffer.
For an $80,000 salary with $12,000 in employer benefits and 30 billable hours/week: total replacement target ≈ $101,652 / 1,440 billable hours = ~$70.59/hr break-even, or ~$84.71/hr with a 20% profit buffer. The $38/hr you calculated from salary ÷ 2,080 would leave you earning significantly less than you did as an employee.
Hourly Rate
The amount a freelancer charges per hour of work, calculated to cover expenses, taxes, and desired income.
Self-Employment Tax
The 15.3% US tax paid by freelancers covering both the employer and employee portions of Social Security and Medicare.
Overhead
The fixed business costs a freelancer incurs regardless of how much client work they do — rent, software, insurance, and other ongoing expenses.
Billable Hours
Hours worked on client projects that can be charged to the client, as opposed to non-billable hours spent on admin, sales, or professional development.
Your employer salary hides significant hidden compensation. They pay half your Social Security and Medicare taxes (7.65% of salary), subsidise health insurance (often $5,000-$15,000/year), offer paid vacation (worth 8-10% of salary), and may match retirement contributions. As a freelancer, you pay all of these yourself — so your rate must cover them to truly match your employee take-home.
A common rule of thumb is to multiply your salary-equivalent hourly rate by 1.5 to 2× to arrive at a freelance rate. So if $80,000/2,080 hours = $38/hr salary equivalent, your freelance rate should be $57-$76/hr minimum. This calculator gives you a precise number based on your specific situation.
Most freelancers bill 25-35 hours per week despite working 40-50 hours. The unbillable time goes to admin, sales, invoicing, professional development, and business management. New freelancers often underestimate this. Using 30 hours/week is a conservative and common baseline.
Yes — include it in the employer benefits value. A 4% match on an $80,000 salary is $3,200/year that you must now fund yourself via SEP-IRA or Solo 401k contributions. Not including it means you're accepting a real pay cut to go freelance.
Hourly Rate Calculator
Calculate your optimal freelance hourly rate based on your income goal, billable hours, overhead costs, and desired profit margin.
Take-Home Pay Calculator
Calculate your true freelance take-home pay after self-employment tax, income tax, business expenses, health insurance, and retirement contributions.
Income Goal Calculator
Calculate the gross revenue you need to earn as a freelancer to hit your desired take-home pay after taxes and expenses.