Freelance Day Rate
Almost everyone sets a first freelance rate the same way: halve the old salary, divide by 220, call it a day rate. Two years later they are working more and keeping less than when they were employed, and the reason is never the division. It is that 220 was never the number. Fifty-two weeks at five days is 260 working days; take off your holiday, the public holidays and the days you set aside for being ill and you are near 220 — but then take off the share of the remaining days that goes on quoting, invoicing, chasing payment, marketing, admin, and the calls that turn into nothing, and the days you can actually charge for are far fewer again. That last number, the billable ratio, is the one that decides everything, and this tool shows the whole chain: 260 working days becoming the far smaller figure you can actually bill. Enter your target take-home, the days and weeks you work, your billable ratio, your business costs, the pension nobody is paying for you any more, and the tax and contributions rate you enter yourself — it returns the billable days worked out step by step, the day rate those days would have to carry, the hourly equivalent, a full breakdown from rate down to take-home that foots to the cent, a sensitivity table showing how sharply the required rate moves when the billable ratio or the holiday changes, and the reverse view: what a rate you can actually charge would leave, and how many billable days it would take to reach the target. No tax system is modelled and no rate, ratio or holiday allowance is baked in, because they differ by country, by trade and by person. The rate this arithmetic requires may well be more than clients will pay — and knowing that from a sum, before the year starts, is the point.
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Worked example
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Inputs
- Target take-home for the year $
60000 - Days a week you work
5 - Weeks of holiday you take
5 - Public holidays (days)
8 - Days set aside for sickness
5 - Billable ratio % — the share of working days you can actually charge for
75 - Business costs for the year $ — software, insurance, equipment, accountant, workspace, training, travel
9000 - Pension or retirement contribution for the year $
6000 - …and that contribution is
Taxed the same as your take-home / Taken out before tax - Tax and contributions rate % — the figure you enter yourself
30 - Hours in your working day
8 - Reverse check: a day rate you can actually charge $
500
Frequently asked
What is a billable ratio?
The share of the days you work that you can actually put on an invoice. Quoting, invoicing, chasing payment, marketing, bookkeeping, admin, training and the calls that go nowhere are all real work and none of them is chargeable. The ratio is the single most powerful number in this sum: it multiplies the days, so a change of ten points in it moves the required rate far more than most people expect. The tool prints a sensitivity table for exactly that reason. It has no default opinion about your ratio — track your own weeks for a month or two and enter what you find.
Why doesn't it know my tax rate?
Because there is no rate this page could know. Income tax, social contributions, self-employment charges and whatever else comes off differ by country, by year, by trade and by how much else you earn. Baking in a number would make it confidently wrong for nearly everybody. The tool asks for the one figure you can actually get — from an accountant, a tax authority's own calculator, or last year's return — and does the arithmetic with that. It models no tax system and names none.
How is this different from the Shop Rate Calculator?
Different question, different person. Shop Rate is for a business with premises and employees: it spreads annual overhead across the technician hours you can bill and adds a profit margin on top of direct labour, so it answers "what must the shop bill per hour to cover itself". This tool is for one person with no employees, working backwards from the take-home you want to the day rate that produces it, through your own billable days, costs, pension and tax. If you have a unit, staff and a payroll, use Shop Rate. If it is just you, use this.
Why round the required rate up?
Because a rate rounded down lands under the target, which is the one direction that defeats the purpose of the sum. Every other figure on the page is rounded to the whole cent half away from zero, once, at the moment it is derived. The required day rate, the hourly equivalent, and the billable days the reverse view needs are the three that round up, and the output says so where it prints them.
Does the breakdown always add up?
Yes, by construction. The total is the fold of exactly the lines printed above it, not a separately calculated figure — so it cannot be a cent out. Tools that compute the total independently of the lines are off often enough to make people distrust the whole page.
The number it gives me is enormous. Is it wrong?
Probably not. It is what your own inputs require, and it usually looks large because a salary quietly included paid holiday, sick pay, an employer pension contribution, equipment, software, training and the hours between jobs — all of which now come out of the days you bill. Whether clients will pay it is a separate question this page does not answer. What the sum tells you is which input has to move: the target, the costs, the days, the holiday, or the ratio.
How should I treat my pension contribution?
Pick whichever of the two options matches how it actually works where you are. "Taxed the same as your take-home" treats the contribution as money you need on top of your take-home out of taxed profit. "Taken out before tax" subtracts it from profit first and taxes the rest. The tool models no pension or tax system; it just does the arithmetic you choose.
Are the starting numbers on this page realistic?
No. They are invented so the page can show a working calculation. They are not typical, benchmark or suggested figures, and this tool makes no claim about what any of them normally are.