Decision path
Price Your Work: From Hourly Rate to Margin
Most freelancers price backwards: they pick a rate that sounds reasonable and hope it covers everything. This path prices forwards. Start from the income you actually want, derive the hourly rate that funds it, find how many billable hours it takes just to break even, then sanity-check the margin behind every quote. Each step feeds the next — and every number stays editable.
Step 1
Derive your hourly rate from the life you want
Enter your target take-home income, business expenses, tax rate, and realistic billable hours — most freelancers bill far fewer hours than they work. The calculator turns that into the hourly and day rate that actually funds your target, including a profit margin buffer.
Check your inputs.
Step 2
Find your break-even point
Your rate carries over as the price per unit — think of one billed hour as the unit you sell — and your annual expenses become the fixed costs. The target profit is your income goal grossed up for the tax rate you set in step 1 (your rate was built to cover taxes, so the target must be pre-tax too). Add your variable cost per hour (subcontracting, software, delivery costs) to see how many hours you must bill before you earn anything at all.
Check your inputs.
Step 3
Sanity-check margin and markup
Your price and variable cost per hour carry over. Margin and markup are the two numbers clients, accountants, and agencies will quote at you — and they are not the same thing. Check what your pricing really implies, and what price each target margin would require.
Check your inputs.
Frequently asked questions
Why is my calculated rate so much higher than what I planned to charge?+
Because employees see none of the costs you now carry: self-employment taxes, health insurance, software, equipment, unpaid admin time, vacations, and dry spells between clients. A common rule of thumb is that a sustainable freelance rate lands at 1.5 to 2 times the equivalent employee hourly wage. If the number feels unsellable, the levers are billable hours, expenses, and income target — not wishful rounding.
What counts as a variable cost for a freelancer?+
Anything that scales with each hour or project you deliver: subcontractors, per-project software or API usage, payment processing fees, travel billed to a job. Costs that stay the same whether you bill 10 or 40 hours a week — insurance, subscriptions, your accountant — are fixed costs and belong in step 2's fixed-costs field instead.
What is the difference between margin and markup?+
Margin is profit as a share of the price; markup is profit as a share of the cost. A $50 cost sold at $100 is a 50% margin but a 100% markup. Mixing them up is one of the most common pricing errors in quotes and agency negotiations — step 3 shows both for the same numbers so the difference is explicit.
Is this tax or business advice?+
No. These calculators illustrate standard pricing math with your own numbers; they don't know your jurisdiction, entity type, or deductions. Tax rates especially vary widely — treat the tax field as an estimate and confirm the real figure with a qualified accountant or tax professional before you commit to a pricing structure.