Why freelancers need higher hourly rates
An employee is paid for about 2,080 hours a year, including holidays and vacation, and the employer covers equipment, software, insurance and part of payroll taxes. A freelancer pays all of that personally and can only bill the hours actually spent on client work. After vacation, public holidays, sick days, sales, invoicing and admin, a full-time freelancer typically bills 1,000 – 1,400 hours a year. Dividing the income you need by that smaller number gives a much higher hourly rate than many people expect.
Hourly rate = (target income + benefits) ÷ (1 − tax rate) + expenses, all ÷ billable hours per year
Typical billable utilization
| Role | Billable share of working time |
|---|
| Solo freelancer, new business | 40 – 60 % |
| Established freelancer with steady clients | 60 – 75 % |
| Agency staff / consultants | 65 – 80 % |
| Partners and managers | 30 – 50 % |
Costs to include
- Taxes: income tax plus self-employment or social contributions, often 25 – 40 % combined.
- Benefits: health insurance, retirement savings, disability insurance.
- Business expenses: computer and phone, software subscriptions, professional insurance, accounting, coworking, travel, training.
- Unpaid time: proposals, meetings, invoicing, chasing payments, learning.
Hourly, daily or project pricing?
Hourly billing is transparent and protects you from scope creep. Day rates suit consulting and on-site work. Fixed-price and value-based pricing can earn more when you work efficiently – but you still need to know your hourly cost to quote safely. Estimate the hours, multiply by your rate, then add a contingency for unknowns.
Tracking time pays
Time tracking apps show where your hours go: which clients are profitable, how long tasks really take and how much time disappears into admin. Even a few unbilled minutes per day add up to several weeks of income per year. Many invoicing tools turn tracked time into invoices automatically.
Raising your rates
Review your rate at least once a year. Increase it for new clients first, give existing clients notice, and use your tracked data – utilization, project profitability and market rates – to back up the decision.
Frequently asked questions
How many billable hours are in a year?
For a full-time freelancer, typically 1,000 – 1,400 hours after time off and non-billable work, compared with 2,080 paid hours for an employee.
How do I calculate my freelance hourly rate?
Add your target income, benefits and taxes, add business expenses and divide by your realistic billable hours per year.
What is a good billable utilization rate?
About 60 – 75 % for established freelancers and 65 – 80 % for agency staff. Above 80 % is hard to sustain.
How do I convert an hourly rate to a day rate?
Multiply the hourly rate by the billable hours in a typical day – often 6 – 7 hours rather than 8.
Should I charge hourly or per project?
Hourly protects you when scope is unclear; project pricing rewards efficiency. Either way, know your hourly cost.
About RateSheet
RateSheet is an independent, free pricing calculator for freelancers, consultants, contractors and small agencies. Tax figures are simplified estimates; consult an accountant for your situation. We are not affiliated with any time tracking or invoicing software.
Every formula on this page runs entirely in your web browser. The numbers you type are never uploaded, stored or shared. Our goal is simple: give you an honest starting point so you can compare product specifications with confidence and avoid paying for capacity you do not need – or buying something too small to do the job.
The methodology combines widely published engineering rules of thumb, manufacturer data sheets and the electrical code practices that installers use every day. We review the assumptions regularly and update the calculator when typical product specifications change.
Privacy Policy
Last updated: October 28, 2026
This Privacy Policy explains how RateSheet ("we", "us") handles information when you visit this website. By using the site you agree to this policy.
Information we collect
We do not require registration and we do not ask for your name, address or payment details. Values entered into the calculator are processed locally in your browser and are not transmitted to our servers. Like most websites, our hosting provider may automatically record standard server log data such as IP address, browser type, referring page and time of visit for security and performance purposes.
Cookies and advertising
We use Google AdSense to show advertisements that keep this tool free. Third-party vendors, including Google, use cookies to serve ads based on a user's prior visits to this website or other websites. Google's use of advertising cookies enables it and its partners to serve ads to users based on their visit to this site and/or other sites on the Internet. You may opt out of personalized advertising by visiting Google Ads Settings, or opt out of some third-party vendors' use of cookies for personalized advertising at www.aboutads.info. To learn more, see How Google uses information from sites or apps that use its services.
Visitors from the European Economic Area, the United Kingdom and Switzerland are shown a consent message powered by a Google-certified consent management platform, where you can accept, reject or manage cookie choices. You can change your choices at any time from the privacy link displayed by that message. Some visitors may also be offered the option to view a short ad or complete another offer in exchange for access to the content; this choice is provided by Google and is entirely optional where alternatives are offered.
Analytics
We may use privacy-friendly, aggregated statistics to understand which features are used. These statistics do not identify you personally.
Your rights
Depending on where you live (for example under the GDPR or the CCPA/CPRA), you may have the right to access, correct or delete personal data and to object to certain processing. Because we do not keep personal data from the calculator, most requests can be handled by clearing cookies in your browser. For any other request, contact us at the address above.
Children
This site is intended for a general adult audience and is not directed at children under 13. We do not knowingly collect personal information from children.
Changes to this policy
We may update this policy from time to time. The date at the top of this section shows when it was last revised.
Terms of Use & Disclaimer
The calculator and articles on this website are provided free of charge for general information and educational purposes only. Results are estimates based on typical values and simplifying assumptions; real-world performance depends on the specific product, installation, climate, wiring and how you use your equipment.
Nothing on this site is professional engineering, electrical or financial advice. Always follow the manufacturer's instructions and local electrical codes, and have permanent installations, transfer switches and grid-connected systems designed and installed by a licensed electrician or qualified installer. Never operate fuel-burning generators indoors or in enclosed spaces – carbon monoxide can kill within minutes.
The site is provided "as is" without warranties of any kind. To the fullest extent permitted by law, RateSheet is not liable for any loss or damage arising from the use of, or reliance on, the information or results provided. Product and brand names mentioned belong to their respective owners and are used for identification only. You may use the calculator for personal and commercial purposes, but you may not copy or republish the site content without permission.
RateSheet