Stop Undercharging for Your Time
The most common mistake independent contractors and freelancers make is calculating their hourly rate based on a standard 40-hour work week. This completely ignores the reality of running a solo operation.
The Billable Time Fallacy
You are never billing 100% of your working hours. Pitching clients, sending invoices, marketing, and answering emails are required to keep the business alive, but they are unbillable. If you work 40 hours a week, you might only be billing 24 of them. Your hourly rate must subsidize the time you spend managing your business.
Taxes and Expenses
When you are employed, your employer pays a portion of your payroll taxes and covers all of your overhead (software, internet, hardware). As a freelancer, you absorb all of this. This calculator works backward—starting from your desired take-home pay, adding your overhead and taxes, and dividing it only by the hours you are actively generating revenue.