Why is the hourly rate so high?

Because billable hours are few and must cover costs/tax/gaps/benefits; it isn't take-home.

Tax is a reserve, not collected tax; handle it under local rules.

RATE LAB

Freelance Rate Calculator

Q: What is the formula?

Gross = (target income + costs) / (1 - tax) / (1 - margin); hourly = gross / annual billable hours.

Enter target annual income, business costs, tax reserve, billable hours/week, weeks off and margin to back-solve a floor hourly/day/month rate plus project references. Treat it as a starting point; combine with market rates/client value/contract terms.

—Floor hourly

—Day rate

—Monthly gross

—40h project ref

Enter inputs to calculate.

Formula: gross=(target income+costs)/(1-tax)/(1-margin); hourly=gross/annual billable hours.

Tools freelancers useFreshBooks — invoicing/accounting QuickBooks — self-employed accounting Wave — free invoicing/accounting

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Freelance Rate Toolkit — $19

XLSX calculator + client profitability + rate-increase email template. Download the free checklist first.

Free: rate checklist (PDF)Buy the full toolkit by email ($19)

XLSX is sent manually after payment; checkout is by email, not on this site.

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Target annual income (gross)Business costs/year

Tax reserve %Profit margin %

Billable hours/weekWeeks off/year

This is a floor, before client discounts/payment terms/bad debt; add a risk buffer to project prices.