Free salary to freelance rate calculator
Dividing a salary by 2,080 is the most common pricing mistake people make when they leave a job. A $70,000 salary is $33.65 an hour the employee way — but the freelance rate that genuinely replaces it, on the defaults below, is $113 an hour, because a salary hides costs your employer used to carry: the contributions and benefits paid on top of your pay, your paid holidays, and the working hours no client will ever be billed for. This calculator starts from your salary and adds each layer back, one visible step at a time. It is a planning estimate, not tax or financial advice.
Your salary, converted
Already freelance and starting from a target income instead? That is the hourly rate calculator — the same chain, without the salary step.
The rate that replaces it
The naive division — salary ÷ 2,080 hours — gives $0.00 an hour. That number assumes every hour is billable and every employer cost has vanished. The breakdown below shows where the real figure comes from.
| Annual salary | $0 |
| Salary + employer costs you now cover (20%) | $0 |
| Plus business expenses — the total the year must produce | $0 |
| Grossed up for tax | $0 |
| With profit margin | $0 |
| Working weeks | 0 |
| Total working hours | 0 |
| Billable hours | 0 |
Your rate is saved on this device only, so the Proposal Generator and Project Price Calculator can prefill it. Want to tune it from a target income instead of a salary? Take this rate to the full rate calculator.
Worked example
The numbers pre-filled in the form above are a complete worked example: a $70,000 salary converted with a 20% employer-cost uplift, $5,000 of annual business expenses, a 25% tax estimate and a 10% profit margin — working 40 hours a week, taking four weeks of unpaid vacation, and billing 60% of the hours that remain. Enter those numbers above and the calculator returns exactly this:
| Annual salary | $70,000 |
| The same salary the employee way ($70,000 ÷ 2,080 hours) | $33.65/hr |
| Salary + employer costs you now cover (× 1.20) | $84,000 |
| Plus business expenses | $89,000 |
| Grossed up for tax (divide by 0.75) | $118,667 |
| With 10% profit margin | $130,533 |
| Working weeks (52 − 4) | 48 |
| Total working hours (48 × 40) | 1,920 |
| Billable hours (60% of 1,920) | 1,152 |
| Freelance hourly rate ($130,533 ÷ 1,152) | $113 |
| Day rate (8 hours) | $906 |
Read the gap the way an employer would. At $33.65 an hour across your 1,152 billable hours, you would bill $38,769 in a whole year — a little over half the salary you were trying to replace, before a single business expense or a dollar of tax. The $113 rate is not the salary with a markup; it is the same income, re-based onto the hours a freelancer can actually sell, with the costs of being employed moved from an employer’s ledger onto yours. If the figure shocks you, the inputs are where to argue — is 60% of your week really billable? Is 20% really what your employer paid on top? — not the arithmetic.
Why the gap is so big
Every step between $33.65 and $113 is a cost that employment made invisible. None of them is padding — remove one and you have not found a cheaper rate, you have found the bill you will pay yourself later.
- Your employer paid more than your salary. On top of the number on your contract sat employer payroll contributions, insurance, pension contributions and paid leave — real money, spent on you, that never appeared in your pay. As a freelancer all of it is yours to fund, so the conversion adds it back as an uplift on the salary. What it actually was varies by country and employer, which is why it is an input: 20% is a common starting point, not a statistic, and yours may be higher.
- Paid leave stops being paid. A salary pays you for 52 weeks including the ones you spend on holiday. A freelance rate is earned only in the weeks you work — four weeks off turns 52 paid weeks into 48 earning weeks, and the same income has to be produced by fewer of them.
- Not every hour is billable. Admin, marketing, proposals, invoicing and chasing payment are real work that no client pays for directly. At 60% billable, a 40-hour week yields 24 paid hours; the rate is carried by those, not by the 40. This is the input people flatter most — if you have never tracked it, 50–65% is a realistic starting range for solo freelancers.
- Your business expenses come out of the same pot. Software, insurance, equipment, an accountant — as an employee these were someone else’s budget lines. Now they are yours, and they are added before the rate is set, not absorbed after it. If your expenses figure is a guess, our freelance expenses checklist turns the forgotten costs into one honest annual number.
- Tax comes out of your rate, not your payslip. Employment deducted tax before you saw the money; freelancing hands you the gross and trusts you to set the tax aside. The chain grosses the total up — dividing by one minus your tax estimate — so what is left after tax still covers the salary you meant to replace and the expenses on top of it.
- The margin is what makes the year survivable. A salary arrives in quiet months too. A freelance income does not, so the final step adds a margin — savings, a buffer for the gaps between clients, the beginnings of a pension. Skip it and the rate works only in a year where nothing goes quiet and nothing goes wrong.