Freelance Rate Calculator — Minimum Hourly, Day & Project Rate
Work back from the income you want to the hourly, day and project rate you need, after expenses, tax and unbillable time.
| Take-home pay | $70,000.00 |
| + Tax set-aside (28% of gross) | $27,222.22 |
| = Gross income | $97,222.22 |
| + Business expenses | $12,700.00 |
| + Profit buffer (10% of revenue) | $12,213.58 |
| = Revenue needed | $122,135.80 |
(52 − 4 weeks) × 40 h − (9 + 5 days) × 8 h = 1,808 working hours 1,808 × (1 − 25% non-billable) = 1,356 billable hours $122,135.80 ÷ 1,356 h = $90.07 per hour
Annual business expenses: $12,700.00
Compare with a salaried job
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This freelance rate calculator works out the minimum hourly rate you need to charge, starting from what you want to earn. It adds the tax you need to set aside, your business expenses (software, insurance, equipment, accounting, the retirement savings no employer is matching) and a profit buffer, then divides by the hours you can actually bill once vacation, statutory holidays, sick days and unpaid admin time are taken out. The result is an hourly rate, a day rate and a price for any project estimate.
The usual mistake is dividing the salary you want by 2,080 hours. A freelancer bills nowhere near 2,080 hours a year, and pays for things an employer would cover. The comparison panel puts a number on that: enter a salary offer and its benefits, and it shows the freelance rate that would leave you with the same income, next to the job's own hourly equivalent. It's a floor for pricing, not tax advice.
How to use
- Enter the annual income you want and whether it is take-home (after tax) or gross.
- Set your tax set-aside percentage and a profit buffer, then adjust the expense list to your real costs.
- Set your working week, weeks off, holidays, sick days and the share of time that isn't billable.
- Read the minimum hourly and day rate, price a project by its estimated hours, and compare with a salaried offer.
Frequently asked questions
How do I calculate my freelance hourly rate?
Add up the income you want before tax, your annual business expenses and any profit buffer, then divide by the hours you can bill in a year. For example, $97,000 of gross income plus $12,700 of expenses, with a 10% buffer, is about $121,900 of revenue; over 1,250 billable hours that is about $97.50 an hour. The calculator does each step and shows the working.
How many billable hours does a freelancer have in a year?
Far fewer than 2,080. Take 52 weeks, remove vacation (say 4 weeks), statutory holidays (9 in Ontario) and some sick days, and a 40-hour week leaves around 1,800 working hours. Then remove the time spent finding work, writing proposals, invoicing and learning; at a quarter of your time that leaves about 1,350. Many solo businesses bill well under that in their first years.
How much should a freelancer set aside for taxes in Canada?
It depends on your income, province, deductions and whether you are incorporated, so ask an accountant for your figure. As a self-employed person in Canada you pay both the employee and the employer share of CPP contributions on your net self-employment income, on top of income tax, and you usually pay by quarterly instalments once you owe more than $3,000 in a year ($1,800 in Quebec). GST/HST you collect from clients is not income and should be kept separate.
How do I convert a salary to a freelance rate?
Don't divide the salary by 2,080. Add the value of the benefits (health and dental, pension or RRSP match, the employer's CPP and EI share), add the expenses an employer would have paid, and divide by your realistic billable hours. The comparison panel does this; with typical inputs the freelance rate comes out well above the job's hourly equivalent.
Should I charge hourly, by the day, or by the project?
Use the hourly figure as a floor whichever you choose. Day rates suit on-site or embedded work and avoid arguments over minutes. Project prices reward you for working efficiently and suit well-defined scopes; price them as your estimated hours × your rate, plus a contingency for the unknowns, and get the scope in writing.
What a freelance rate has to cover that a salary doesn't
• Unbillable time: sales, proposals, admin, bookkeeping, learning, gaps between projects.
• Paid time off: an employee's vacation and statutory holidays are paid; yours are not, so they have to be priced into the hours you do bill.
• Benefits: health, dental, disability and life insurance, and retirement savings without an employer match.
• The employer's share of payroll taxes: in Canada, self-employed people pay both halves of CPP contributions.
• Business costs: software, hardware, insurance, an accountant, a website, a home office or co-working space.
• Risk: late payers, slow months and clients who leave. The profit buffer is there for these.
Reading the result
The hourly figure is the minimum at which the business pays you what you set out to earn. It is not a market rate. If it comes out above what clients in your field pay, the levers are: bill more of your hours (less unbillable time, better utilisation), lower expenses, specialise so you can charge more, or adjust the income target. If it comes out well below the market rate, charge the market rate.
Re-run the numbers each year with your real billable hours from your time records and your real expenses from your books. Your first estimate of billable time is almost always too optimistic.
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