Understanding Your True Freelance Income: A Complete Guide
One of the biggest mistakes new freelancers make is setting rates based on their desired salary without accounting for taxes, fees, and overhead. This calculator helps you avoid that trap by working backward from your target take-home income to determine what you actually need to charge.
Why Most Freelancers Undercharge
When you transition from employment to freelancing, it's tempting to convert your old salary into an hourly rate and call it a day. But employees don't see the full cost of their employment: employers pay half of Social Security and Medicare taxes, cover health insurance, provide paid time off, and handle business expenses. As a freelancer, you're responsible for all of this.
The Hidden Costs of Freelancing
Self-employment tax alone is 15.3% of your income, covering both the employee and employer portions of Social Security and Medicare. Add federal and state income taxes, and you're looking at 25-35% or more going to taxes. Health insurance can cost $400-$1,200 per month. Business expenses like software, equipment, and workspace add up quickly. Platform fees on traditional marketplaces can take another 10-20% of each payment.
How This Calculator Protects You
Our calculator ensures you account for every major expense that impacts your take-home income. By entering your target net income and realistic work schedule, you get a required hourly rate that actually supports your lifestyle without burnout. The detailed breakdown shows exactly where your money goes, helping you make informed decisions about your pricing and business expenses.
Setting Realistic Billable Hours
Not every hour you work is billable. You'll spend time on proposals, client communication, admin tasks, learning, and marketing. Most freelancers find that 25-30 hours of billable work per week is sustainable. Some highly efficient freelancers bill up to 35 hours, but be realistic about your capacity, especially when starting out.
The Freelancea Advantage
Unlike traditional freelance platforms that take 10-20% of your earnings, Freelancea's model lets you keep 93% of what you earn, with only a small 7% payment processing fee. This means your required hourly rate can be lower while still hitting your income targets, making you more competitive without sacrificing your financial goals.
Growing Your Rate Over Time
Your rate should evolve with your expertise. Start with a rate that covers your needs, then increase it as you build skills, testimonials, and a strong portfolio. Most successful freelancers raise their rates by 10-20% annually. Use this calculator periodically to ensure your rate keeps pace with your growing expenses and expertise.