Your freelance hourly rate is probably too low – here is the math, step by step

The most common way to pick a freelance rate is to take the salary you want and divide it by the hours in a year.

€50,000 ÷ (52 weeks × 5 days × 8 hours) = €24 per hour.

It looks reasonable, and it is almost three times too low. That number assumes you never take a holiday, never get sick, pay no tax, have no costs, and bill every single hour you sit at your desk.

Here is the same calculation done properly, one step at a time. I use these exact numbers as the defaults in a free rate calculator, so you can follow along with your own.

1. Start with what you want to keep

Your goal is the money you want after tax, not your revenue. In this example: €50,000 a year.

2. Add the tax back

If about 30% of your profit goes to income tax and social contributions, you need to earn more before tax:

Profit before tax = 50,000 ÷ (1 − 0.30) = 71,429 

Use your own country's rate. If you're not sure, a rough guess is better than ignoring it.

3. Count the days you can really work

A year has 52 weeks, but you won't work all of them:

52 weeks × 5 days = 260 days − 5 weeks of holiday = −25 days − 9 public holidays = −9 days − 5 sick days = −5 days = 221 working days 

4. Not every working hour is billable

This is the step most people skip. As a freelancer you also write proposals, answer emails, send invoices, do your bookkeeping, update your portfolio and learn new things. Nobody pays for those hours.

A realistic billable share for a solo freelancer is somewhere between 50% and 70%. With 60%:

221 days × 8 hours × 60% = 1,061 billable hours 

That is very different from the 2,080 hours the naive version assumed.

5. Add your business costs

Software, hosting, a laptop that needs replacing, insurance, an accountant, your phone. Even a lean setup adds up. Here: €310 a month, so €3,720 a year.

Revenue needed = 71,429 + 3,720 = 75,149 

6. Divide

Minimum hourly rate = 75,149 ÷ 1,061 = €70.84 Day rate (8 h) ≈ €567 Monthly revenue ≈ €6,262 

€70.84 instead of €24. Same income goal, same person. The difference is only that the second number includes the parts of freelancing that aren't client work.

7. See what the billable share does

The billable share moves the result more than anything else:

If you're just starting and still looking for clients, you'll be closer to 50% than 80%. Price for that, not for your best month.

A few notes

• This is a minimum, not a market rate. It tells you the price below which freelancing costs you money. What clients will pay depends on your niche, experience and where they are. If the market pays more, charge more.
• VAT comes on top. If you're VAT-registered, add it to the rate you quote. It isn't income.
• Recheck once a year. Costs, tax and the number of clients change, so the rate should too.

Try it with your numbers

I put the whole calculation into a free one-page calculator: northpeak-rate-calculator.pages.dev. It works in English and German, in light and dark mode, and shows where your year goes (billable work, unpaid work, holidays). No sign-up, no cookies, and your numbers never leave the browser.

If you'd rather keep it in a spreadsheet, the same formulas are in the Freelancer Business Kit on Etsy, together with a client and project tracker (Freelance Desk), an invoice tracker and a simple business budget.

What billable share do you actually reach in a normal month? I'd be curious to hear in the comments.