Freelance rate calculator: check consulting quotes

How to calculate your freelance rate

An employee salary covers 40 paid hours every week, plus benefits and paid time off. A freelance rate works in reverse: you decide what take-home money you need, add overhead and taxes, and divide that total by the hours clients will actually buy.

The formula follows three basic steps:

Gross revenue needed = (Target income ÷ (1 − Tax rate)) + Annual expenses
Annual billable hours = (52 − Weeks off) × Weekly hours × Billable capacity %
Target hourly rate = Gross revenue needed ÷ Annual billable hours

A worked example

$90,000 take-home, $12,000 expenses, and a 25% tax rate need $132,000 of gross revenue. Tax applies to profit, so expenses are added after that gross-up.

With 4 weeks off, 35 hours per week, and 60% billable time, that is 1,008 billable hours a year and 21 billable hours a week. The target hourly rate is about $131.

Use the consultant rate calculator to check a quote

A target rate does not tell you whether a fixed fee will cover the work. Enter a proposed fee, planned client-work hours, and extra hours in Check a consulting quote above. The check uses the target rate and currency you have already set.

For the example above, a $3,000 fee covers about 22.91 hours using the underlying target rate (about $130.95 per hour). See what happens when revisions add time:

Planned hours	Extra hours	Total hours	Effective hourly rate
20	0	20	$150
20	4	24	$125
20	10	30	$100

Four extra hours put this quote below the target. Before you agree to the fee, reduce the included work, raise the fee, or agree how additional work will be charged.

Effective hourly rate = Fixed fee ÷ (Planned hours + Extra hours)
Hour limit at target rate = Fixed fee ÷ Target hourly rate
Hours left before the limit = Hour limit − Planned hours − Extra hours

Include preparation, project meetings, delivery, and revisions in client-work hours, even when the fixed fee has no separate line for them. Keep general business admin in the annual capacity estimate; adding it again to the quote hours would count it twice.

Use the fee for your work, excluding expenses the client reimburses separately. The result is revenue per client-work hour, not take-home pay. Expenses and your tax estimate are already part of the target-rate calculation.

This consultant fee calculator checks your assumptions; it does not estimate what a client will pay. After delivery, replace estimated hours with the actual time from your consulting work record.

Daily and project rates

A day rate is the hourly rate times the billable hours in a working day. At 21 billable hours a week across 5 days, that is 4.2 billable hours a day, not an 8-hour employee day. Multiply the hourly rate by that figure.

For a project fee, estimate the billable hours the work will take and multiply by the hourly rate.

The cost of running a freelance business

Freelancers must pay for items an employer usually handles:

Expense category	Common costs
Business overhead	Software subscriptions, hardware, web hosting, accounting, and legal fees.
Self-employment taxes	Additional tax contributions that employers usually pay half of.
Unpaid time off	Holidays, vacation, and sick leave where no income is earned.
Non-billable labor	Time spent writing proposals, tracking invoices, and marketing your services.

If you only charge what a regular job pays per hour, you will earn less money once expenses and unpaid hours take their share.

Why 100% billable time is unrealistic

A common mistake is assuming a 40-hour workweek yields 40 billable hours.

In practice, solo contractors spend a large share of time running their business:

• Writing project proposals and scopes
• Bookkeeping and sending invoices
• Finding new clients and answering initial leads
• Internal tool maintenance and learning

Use recent time records to estimate capacity: client-work hours ÷ all working hours × 100. For example, 21 client-work hours in a 35-hour week gives 60% billable capacity. Treat the default as an example, not an industry benchmark. Billable vs non-billable hours covers which tasks belong on an invoice and which belong in your overhead.

Track actual billable hours

A target rate gives you a benchmark for client proposals. To reach your income goal, you must know whether your real work matches that plan.

TimeRetain lets you track billable time and administrative work on your own device with manual timers and simple tags. You can check your actual billable capacity over time without uploading private records to third-party servers.

If you already have timesheet records from past client work, use the billable hours calculator to total your past invoices.