Why is the overhead default 30%?

Self-employment tax alone is 15.3% of net earnings. Add health insurance ($500-1500/mo), retirement self-funding (10-15% of revenue), software/equipment, accounting, and you reach 25-35% for most US-based independent consultants.

I bill 40 hours per week. Is that realistic?

Rarely. Even busy freelancers spend 20-40% of their time on non-billable work: client calls without invoice, proposals, admin, sales pipeline. If you genuinely bill 40 hours week after week, you are likely working 55+ total hours.

What about benefits an employer covers?

Bake them into overhead. Health insurance, dental, vision, life, disability, paid time off (since you don't get paid when you don't work), 401(k) match equivalent. Together this is often 20-25% on top of self-employment tax.

Calculator · INTERACTIVE

Freelance rate calculator

What hourly rate do you need to charge to match a target take-home salary?

100% client-side. We never send your inputs to a server.

Target take-home (annual)

What you want left after taxes and overhead.

Overhead %

Self-employment tax + health insurance + tools + retirement. Default 30%.

Billable weeks per year

52 minus vacation, sick, holidays, dry weeks.

Billable hours per week

Realistic. Most freelancers bill 20-30 hours, not 40.

Required hourly rate

$124.22

Annual revenue needed

$142,857

Billable hours/year

1150

Revenue per week

$3,106

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Methodology

How it works

Freelancers who set their hourly rate by dividing a salaried equivalent by 2,080 hours typically end up underpaid. The realistic math:

You don't bill 40 hours a week. Time goes to admin, sales, dry weeks, sickness.
You absorb overhead an employer would: self-employment tax, health insurance, software, retirement, equipment.

Our formula: required_revenue = target_take_home / (1 − overhead%), then hourly = required_revenue / (billable_weeks × billable_hours).

Default overhead 30% reflects typical US freelancer self-employment tax plus health insurance plus retirement self-funding. Adjust to your situation. Default 46 weeks × 25 hours billable matches realistic indie consulting.

FAQ

Frequently asked questions

Why is the overhead default 30%?: Self-employment tax alone is 15.3% of net earnings. Add health insurance ($500-1500/mo), retirement self-funding (10-15% of revenue), software/equipment, accounting, and you reach 25-35% for most US-based independent consultants.
I bill 40 hours per week. Is that realistic?: Rarely. Even busy freelancers spend 20-40% of their time on non-billable work: client calls without invoice, proposals, admin, sales pipeline. If you genuinely bill 40 hours week after week, you are likely working 55+ total hours.
What about benefits an employer covers?: Bake them into overhead. Health insurance, dental, vision, life, disability, paid time off (since you don't get paid when you don't work), 401(k) match equivalent. Together this is often 20-25% on top of self-employment tax.

Disclaimer

This calculator is for general educational purposes only. It is not financial, tax, or career advice. Estimates use simplified models that may not reflect every situation. Consult a licensed professional before making compensation, tax, or career decisions.