Work & Income · Freelancing
Glossary
Every term used in this calculator, defined plainly.
- Billable Hours
- Hours you can charge to clients. The rest of your working time — admin, sales, proposals, professional development — is unbillable but still costs you in time.→ Used in the calculator: Derived from hours/week × billable percentage × working weeks
- Self-Employment Tax
- As a freelancer, you pay both the employer and employee portions of Social Security (12.4%) and Medicare (2.9%) — 15.3% total — plus income tax. This is why freelance rates need to be significantly higher than equivalent salary.→ Used in the calculator: The "Effective tax rate" field. Use 30-40% for most US freelancers.
- Vacancy Rate
- The percentage of your working time spent between clients — no income coming in. 10-20% is typical for established freelancers, 20-30% for newer ones.→ Used in the calculator: The "Gap between clients" field
- Minimum Rate
- The lowest hourly rate you can charge and still hit your income target after all expenses and taxes. The calculator's primary output.
- Suggested Rate
- The minimum rate plus a 30% buffer for unexpected expenses, slow months, or underestimated unbillable time. A safety margin that prevents being caught short.
- Equivalent Salary
- What an employer would need to pay in gross salary to give you the same take-home income as your freelance rate, after accounting for the employer's payroll tax contributions.
Ready to calculate?
Put these terms to work in the calculator.