How to use this tool
Enter your desired annual income, monthly business expenses, tax percentage, billable hours per week, vacation weeks and profit margin. Your rates update instantly with every change โ no submit button needed.
Once you have your baseline rate, compare it against the wider market. Your calculated rate protects your income and business costs โ the market tells you how to position and package it.
Pricing tips
- โNever base your rate only on employee salary maths.
- โInclude admin, sales, marketing and quiet weeks in planning.
- โFor fixed projects, add a scope buffer and define revision limits.
- โReview prices every few months as demand and expenses change.
- โA higher rate with fewer clients is often healthier than a low rate with many.
Key pricing formula
รท (1 โ tax rate)
ร (1 + profit margin)
รท Annual billable hours
= Your hourly rate
Related Tools
How to Calculate Your Freelance Profit Margin
Profit margin for freelancers is the percentage of your total revenue left over after deducting all business costs โ including expenses, tax reserve, and your own income goal. A healthy freelance profit margin is 15โ30%. Below 10% leaves no buffer for slow months, equipment upgrades or skill investment.
| Profit Margin | What It Means | Action |
|---|---|---|
| Below 10% | Dangerously thin โ one slow month causes cash problems | Raise rates or cut costs urgently |
| 10โ20% | Acceptable โ limited reserve | Review rates at next renewal |
| 20โ30% | Healthy โ business is sustainable | Maintain and invest in growth |
| 30%+ | Strong โ room to invest or reduce workload | Consider raising rates further |
Why freelancers need a profit margin beyond their income goal
Your income goal is what you want to take home. Your profit margin sits on top of that โ it funds business growth, a cash reserve, equipment replacement, professional development and the inevitable slow months. Without it, you are running a break-even operation with no resilience.