Convert a salary to an hourly rate in seconds. Then work out a freelance or consulting rate based on the income you want, your expenses, your billable hours and tax.
Based on an employed year of 52 weeks. A full-time year is 2,080 hours.
These figures assume you're employed, with paid time off and benefits covered by your employer.
Work out a freelance rate from thisAs a freelancer, your rate has to cover the hours you can't bill, your business costs, and the payroll tax an employer would normally share with you. Answer five questions to get an hourly rate and a day rate that support the income you want.
By default, we assume 1,200 billable hours a year instead of 2,080. That's about 25 billed hours a week over 48 weeks.
This helps us suggest mentors who price similar work. It doesn't change the calculation.
Here are three ways to turn the same $100,000 take-home into an hourly rate. The highlighted row shows the method this calculator uses.
Employed, 2,080 hours
$48/hr
Salary divided by a full-time year. Your employer covers benefits and paid time off.
Freelance using employed hours
$48/hr
The same calculation, but billed as a contractor. This is how many new freelancers end up undercharging.
Freelance, 1,200 hours plus tax and costs
$133/hr
Take-home plus expenses, adjusted for tax, then divided by the hours you'll realistically bill.
| Type | Hourly | Day rate | What it assumes |
|---|---|---|---|
| Employed, 2,080 hours | $48/hr | $384 | Salary divided by a full-time year. Your employer covers benefits and paid time off. |
| Freelance using employed hours | $48/hr | $384 | The same calculation, but billed as a contractor. This is how many new freelancers end up undercharging. |
| Freelance, 1,200 hours plus tax and costs | $133/hr | $1,064 | Take-home plus expenses, adjusted for tax, then divided by the hours you'll realistically bill. |
The example uses $100,000 take-home, $12,000 expenses, 30% tax and 1,200 billable hours. Amounts are shown in the currency you pick, but the calculator doesn't convert between currencies. Sources: IRS self-employment tax and the US 2,080-hour payroll year.
Here's each step, so you can check the logic for yourself.
Step 1
Add your target take-home pay to your yearly business costs.
Step 2
Divide by 1 minus your tax rate. At 30% tax, divide by 0.70.
Step 3
Divide the result by your billable hours to get your hourly rate.
Step 4
Multiply by the hours in a billable day to get your day rate.
Total to bill = (take-home + expenses) / (1 minus tax rate). Hourly rate = total to bill / billable hours. Day rate = hourly rate × hours per day. Amounts are shown in the currency you pick, with no exchange rate conversion. Compare the result with what others in your field charge. This isn't tax advice.
To convert an hourly rate to a salary, multiply it by 2,080 (40 hours × 52 weeks). $50 an hour is $104,000 a year. To convert a salary to an hourly rate, divide by 2,080, so $104,000 a year is $50 an hour.
That conversion works for employed jobs, but it's the wrong tool for pricing freelance or consulting work. It assumes you'll bill every hour of a full-time year and that someone else pays for your holidays, sick days, software and half of your Social Security. Use the converter at the top of the page for employed figures, and the freelance calculator for the rate you quote clients.
Follow these five steps to set a rate that pays for your time, your costs and your tax.
Step 1
Base your rate on what you need to live on. An employed hourly rate is the wrong starting point.
Step 2
Include software, insurance, an accountant, equipment, and money to tide you over when clients pay late.
Step 3
In the US, self-employment tax is 15.3% before income tax. A 30% total is a reasonable starting point, but check with an accountant.
Step 4
Finding clients, admin, holidays and sick days aren't billable. Many full-time freelancers bill around 1,200 hours a year.
Step 5
Clients tend to haggle less over a day rate. Say your rate once, then give them time to respond.
These founders and consultants set their own rates. Book a session and run your number past them before you send your next proposal.
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Answers about converting salaries, setting a freelance rate, tax, and the limits of the calculator.
Add the take-home pay you want to your yearly business costs, divide by one minus your tax rate, then divide by the hours you expect to bill. For $100,000 take-home, $12,000 in costs, 30% tax and 1,200 billable hours, that's about $133 an hour.
Multiply the hourly rate by 2,080, which is 40 hours a week for 52 weeks. $50 an hour is $104,000 a year. This assumes you're employed, with an employer paying for holidays, sick days and benefits.
Divide the yearly salary by 2,080. $104,000 a year is $50 an hour. If you're freelancing, you'll need to charge more than this to take home the same amount, because of tax, expenses and unbilled time.
It's your hourly rate multiplied by the hours you count as a working day, usually 7 or 8. Many clients prefer to book by the day, and a day rate is less likely to be negotiated down hour by hour.
An employee is paid for about 2,080 hours a year. A full-time freelancer who also finds clients, sends invoices and takes holidays usually bills 1,000 to 1,400. This calculator defaults to 1,200, or about 25 billed hours a week over 48 weeks.
Yes. You choose a tax rate, and the calculator raises your rate so you still take home the amount you want after tax. In the US, self-employment tax is 15.3% of net earnings, on top of income tax. A 30% total is a starting point, not tax advice.
Your rate has to pay for the hours you don't bill, the benefits an employer would normally cover, and the share of payroll tax an employer usually pays. Dividing a salary by 2,080 to get a freelance rate is the most common way people undercharge.
Hourly works well for short or on-and-off work. A day rate makes more sense when a client wants longer blocks of your time, because it covers the time it takes to switch between clients and is easier to hold. Many consultants offer both and let the client choose.
Anything you now pay for yourself: software, insurance, an accountant, co-working space, equipment, money to cover late invoices, and a buffer for quiet months. If you're not sure yet, $12,000 a year is a safe placeholder.
It's the standard US payroll year: 40 hours a week for 52 weeks. Hourly-to-salary converters use it, but freelancers bill far fewer hours once holidays, finding work and admin are taken out.
It's a much better starting point than dividing a salary by 2,080. It doesn't know your market, your niche or what clients will pay, so compare the result with what others in your field charge.
Yes. The inputs are the same: the income you want, your business costs, your billable hours and tax. Consultants usually quote a day rate, and the calculator gives you both.
Yes. Choose a currency from the menu. The calculation is the same in every currency and doesn't convert exchange rates, so enter amounts in the currency you invoice in.
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