Many freelancers set their rate by looking at what others charge, or by dividing an old salary by the number of working days. Both can leave you working full-time for less than you earned as an employee. A sustainable rate starts from the income you need and works backwards.
The method: work backwards
- Target take-home pay: what you want to keep after tax and social contributions.
- Gross up for tax: profit needed = take-home ÷ (1 − effective tax and contribution rate).
- Add business costs to get the revenue you need.
- Add a buffer for quiet months, late payers and savings.
- Divide by realistic billable days for your day rate, then by billable hours per day for your hourly rate.
Your real costs
List everything the business pays for in a year: software subscriptions, hardware (spread over its useful life), phone and internet, coworking or a home-office share, professional insurance, accountant, bank and payment fees, training, travel, marketing. Also consider costs an employer used to cover: pension contributions, health insurance where it is not part of social contributions, and paid holidays.
Billable days: the number people overestimate
A year has about 260 weekdays. From that, subtract:
- holidays you want to take (be honest),
- public holidays falling on weekdays (they vary by country and region),
- sick and personal days,
- non-billable time: finding clients, proposals, invoicing, bookkeeping, learning. For many freelancers this is 15–30% of working time, more in the first year.
Many people find they have somewhere between 150 and 200 genuinely billable days, not the 220+ they first assumed. Your number is what matters; the calculator lets you set each assumption.
Worked example
Illustrative assumptions only:
| Target take-home pay | 40,000 |
| Effective tax + social contributions | 35% of profit |
| Profit needed: 40,000 ÷ 0.65 | 61,538 |
| Business costs | 6,000 |
| Buffer 10%: (61,538 + 6,000) × 1.10 | 74,292 revenue needed |
| Working days: 260 − 25 holiday − 10 public − 5 sick | 220 |
| Billable after 20% non-billable time | 176 days |
| Day rate: 74,292 ÷ 176 | ≈ 422 per day |
| Hourly rate at 7 billable hours | ≈ 60.30 per hour |
Change any input in the freelance rate calculator to see how sensitive the result is. Billable days and the tax rate usually move it the most.
Check against the market
Your calculated rate is a floor, not a price tag. If clients in your niche pay much more, charge more. If they pay less, your options are to reduce costs, raise utilisation, specialise, or move to fixed-price packages where you earn more per day by working efficiently.
Knowing your real margin each month makes the next rate conversation easier.Freelancer Money OS – EU Edition is a €19 spreadsheet that does this for you (Excel + Google Sheets).
Rates, VAT and cross-border clients
Always quote business clients a net rate (excl. VAT). If you are VAT registered, domestic clients pay your rate plus your country's VAT. EU business clients abroad are usually invoiced without VAT under the reverse charge (see the reverse charge guide), so your net rate is what they pay. For clients paying in another currency, include a currency buffer or invoice in euro.