Advanced options
Only billable time earns: admin, marketing, quoting and chasing invoices come out of the other hours, which is why 6 billable hours in an 8-hour day is optimistic for many freelancers. Remember the rate must also fund what an employer would pay: pension, holiday, sick cover and employer NI equivalent.
What The Freelance Hourly Rate Calculator Works Out
- Minimum hourly rate: target income plus business costs, divided by the hours that actually bill (days a week x weeks a year x billable hours a day). GBP 40,000 plus GBP 5,000 of costs across four billable days, 46 weeks and six chargeable hours is 1,104 hours and a floor of about GBP 41 an hour. Dividing a salary by a 2,080-hour year produces the classic underpriced freelancer.
- Day rate: the same annual need divided by billable days, roughly GBP 245 a day in the example. Day rates beat hourly for focused project work; hourly suits open-ended support.
- Quote with headroom: the floor plus 15% to fund the dry spells and the late payers. Statutory interest at 8% over base is claimable on late B2B invoices, rarely invoked but usefully mentioned.
- Pension saving (advanced): adds a percentage of target income for your own pension, since nobody else is contributing. Employer pension contributions, paid holiday and sick leave are what employment bundles invisibly.
- Utilisation (advanced): the share of your planned billable hours you actually sell. Gaps between clients are real: 70% to 85% is common even for established freelancers, and the rate rises accordingly.
- Headroom override (advanced): set your own buffer above the floor instead of the default 15%.
- Rate including VAT (advanced): adds 20% VAT to the quote rate. Registration is compulsory once turnover passes the VAT threshold and optional below it; business clients usually reclaim it, consumers cannot.
- Rate to match the employed package (advanced): takes the salary of a comparable job, adds 30% for employer on-costs (pension, employer National Insurance, holiday, sick pay, training and equipment, conventionally worth 25% to 40%), then spreads it over your billable hours. It is why the folk formula "day rate = salary in hundreds" looks generous but is not.
- Typical project price (advanced): the hours a project takes multiplied by the quote rate, the starting point for fixed-price quotes. Value or fixed-project pricing escapes the time-for-money ceiling where outcomes are legible.
- Invoicing target (advanced): the annual need broken into a monthly and weekly figure to check against what is actually being invoiced. Professional indemnity and public liability insurance are the two policies clients increasingly require before contracts start.