What next?
A rate is one number in a freelance plan. These are the ones that decide whether it holds up.
What your result means
Day rate is what you must charge on the days you actually bill for the year to produce your target take-home. Billable days is the number that does the damage: a full-time year is around 260 working days, and after holiday, public holidays, illness and unbilled admin most freelancers bill closer to 180. You must invoice is the revenue the whole plan needs — the figure to compare against what you actually billed last year, which is usually the moment the rate stops feeling greedy.
Why this one is different
This works backwards from the take-home you want rather than forwards from a salary. It shows how many days a year are genuinely billable once holiday, bank holidays, sickness and unpaid admin are removed — usually far fewer than the 260 most rate advice assumes.
Dividing a salary by 260 is wrong three times over
It assumes every working day is billable, that the business has no costs, and that tax comes off the same number it would as an employee. None of the three is true. The employer used to absorb your holiday, your sick days, your pension, your software and the hours you spend on things nobody pays for.
Charging a rate that only matches an old salary is how people work more hours for less money and conclude that freelancing does not pay. The arithmetic here is not ambitious — it is the rate that makes you level.
How it works
The calculator runs backwards. It grosses your target take-home and pension up for tax to get the profit the business must make, adds your business costs to get the revenue you must invoice, then divides by the days you can actually bill. Billable days start from your working days a year, subtract holiday, public holidays and contingency, and then remove the share of your time that goes on unbilled work. The hourly figure is the day rate divided by the billable hours in a day, which is deliberately not the same as the hours you are at your desk.
How to use this calculator
- Enter the take-home you want, not a gross salary. This is the number that has to cover your life.
- Put in an effective tax rate — your whole tax and social-contribution bill as a share of profit, not your top band. Run a rough profit figure through the salary or tax calculator if you are not sure.
- Add your business costs and the pension you intend to pay. Both come out of what you invoice.
- Set your time off honestly: holiday you will genuinely take, public holidays, and days lost to illness or a client pulling out.
- Set the unbilled share. Pitching, invoicing, admin, marketing and learning. Twenty per cent is optimistic for most people; thirty is common in the first two years.
- Compare the result with the target ÷ every working day line. That gap is what undercharging looks like.
Formula
Everything is annual. Time off is holiday plus public holidays plus contingency days. The unbilled share removes the working time nobody pays for, so the rate is spread across the days you actually invoice rather than every day you work.
Example calculation
A freelancer who wants £35,000 take-home, with an effective tax rate of 22%, £3,000 of business costs, £2,000 into a pension, 28 days holiday, 8 public holidays, 5 contingency days, 25% unbilled time and 7 billable hours a day:
Billable: 219 × 0.75 = 164.25 days
Profit needed: (35,000 + 2,000) ÷ 0.78 = £47,436
Revenue needed: 47,436 + 3,000 = £50,436
Day rate: 50,436 ÷ 164.25 = £307
Hourly: 307 ÷ 7 = £43.87
Dividing the target by 260 would have said £135 a day — the real rate is 2.3× that
Frequently asked questions
What effective tax rate should I put in?＋
Not your top band. The effective rate is your whole tax and social-contribution bill divided by your profit, and it is always lower than the marginal rate because the lower bands and any personal allowance apply first. Take a guess at your profit, run it through the salary or tax calculator, divide the total deductions by the profit, and use that. Re-run it once the rate settles, because the two figures move each other.
Is 20% unbilled time realistic?＋
It is on the optimistic side. Twenty per cent is one day a week on pitching, invoicing, admin, marketing and learning, which is what an established freelancer with repeat clients might manage. In the first year or two, thirty to forty per cent is common because finding the work is most of the work. Enter the honest number: understating it is precisely the mistake this tool exists to catch.
My market will not pay this rate. Now what?＋
Then the plan does not work as drawn, and it is better to know now. The levers are the target take-home, the costs, the unbilled share and the number of days you sell. Raising billable days is the one people reach for and the one that burns out; cutting the unbilled share by getting repeat clients is slower but permanent. If the gap is large, the honest reading may be that the rate is fine and the target needs a different market, a productised service, or employment.
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Assumptions & limitations
Every figure here comes from a simplified model. Keep these limits in mind when reading your result:
- The tax rate is one you supply, not one this tool models. It stands in for income tax and social contributions together, and it is applied as a flat share of profit — real systems are banded, so treat the result as a plan rather than a tax return.
- Pension is treated as an amount paid out of profit before tax. Depending on your country and business structure the relief may work differently, which changes the gross-up slightly.
- VAT and sales tax are ignored entirely. Where you charge it, it passes through you rather than being income — but registration thresholds and flat-rate schemes can affect what you take home.
- Every billable day is assumed to be sold at the same rate. In practice rates vary by client and retainers pay differently from project work.
- The model says nothing about whether your market will pay the result. It tells you what the rate has to be, not what it can be.
- Business structure is out of scope: sole trader, limited company and umbrella arrangements differ substantially in how profit becomes take-home.