Freelance Hourly Rate & Runway Calculator

The freelance rate formula, explained

Most freelancers price by guesswork: they scroll a few threads, spot a number that feels respectable, and hope it holds. A business prices the other way around - it starts from the money that must come out at the end of the year and works backwards to a rate. That is exactly what this page computes: your target take-home, plus everything the business owes, divided by the hours you can honestly sell.

Two multipliers surprise people most: taxes and vacation. Every vacation week deletes roughly two percent of your selling year, so six weeks off shrinks capacity more than most client discounts ever would. And because roughly a quarter of every invoice belongs to the tax authorities before you see a cent, your gross rate must sit well above a salaried equivalent - the calculator makes that gap visible instead of hiding it.

Step-by-step: from income goal to invoice

1. Fix your target take-home - the amount you want to clear personally after all taxes and business costs.
2. Tally monthly business overhead: software, insurance, accounting, hardware, coworking - then multiply by twelve.
3. Choose a conservative effective tax rate. If you are unsure, start near 30% and refine after your first full filing year.
4. Count real capacity: billable hours per week, not hours worked, and subtract vacation, sick leave and slow-season slack.
5. Divide to get your floor rate, then sanity-check the hourly, daily and weekly figures against your market - and raise them if demand outstrips your calendar.

Why taxes and overhead come first

A salary hides half the story. Before your payslip appears, an employer quietly covers payroll taxes, benefits, equipment and office space - and freelancers inherit every one of those costs. The largest line is usually tax: in the US, self-employment tax alone runs about 15.3% for Social Security and Medicare, before federal income tax, state tax and local levies stack on top. Combined effective rates of 25-35% are entirely normal for a profitable solo business.

Because tax authorities expect quarterly estimated payments rather than a single annual settlement, discipline beats brilliance. The moment an invoice clears, move the tax share out - the calculator’s monthly tax reserve exists precisely for that habit. Pay the government first, pay yourself second, and let clients fund both.

Runway: the freelancer’s survival metric

A strong rate does not protect you from a weak quarter. Clients pay late, projects pause, and entire months can pass without a signed contract. Runway - liquid savings divided by monthly personal expenses - tells you how long you could operate at zero income without borrowing a cent.

Aim for at least three to six months of runway, and six to twelve if your niche is seasonal or volatile. What counts as liquid:

• Cash in checking and high-yield savings accounts
• Money-market funds and short-term Treasuries you can sell within days
• Genuinely accessible credit lines - usable, but a loan rather than savings, so count them at a discount
• Anything requiring a retirement account, a property sale or a locked deposit does not count

Once your floor rate is set and your runway funded, zoom out. Model the decades-long game with the FIRE calculator, and before you exit any position, let the crypto & stock tax calculator show the after-tax profit first.