Salary to Freelance Rate Calculator
Thinking about leaving a job to freelance, or comparing a contract to a salaried offer? See what hourly rate actually replaces a given salary.
How it works
Formulas used
True employment value = Salary × (1 + Benefits%) Naive hourly equivalent = Salary / 2,080 Billable hours = Weeks × Hours/week × Utilization Recommended rate = [True employment value + Freelance expenses] / (1 − Reserve% − Margin%) / Billable hours Uplift % = Recommended rate / Naive hourly equivalent − 1
Worked example
$90,000 salary, 25% benefits, $8,000 freelance expenses, 46 weeks, 40 hrs/week, 65% utilization, 10% reserve, 10% margin — the recommended freelance rate typically comes out well above the naive $90,000 ÷ 2,080 ≈ $43.27/hour figure, because it accounts for lost benefits and non-billable time.
Limitations
This is a cost-replacement estimate, not a negotiation script — it ignores job security, career growth and other non-financial factors.
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Frequently asked questions
Why is the freelance rate always higher than the naive salary rate?
Because freelancers lose employer-paid benefits and cannot bill 100% of their time, while also carrying new business costs.
Does this include self-employment tax?
Indirectly, through the reserve % — but it is a simplified planning figure, not a tax calculation.
Compare employment and freelance work fairly
A salary is only one part of employment value. A sustainable freelance rate must replace benefits, paid leave, employer taxes, equipment and non-billable time while also compensating you for demand risk and administration.
Make the comparison practical
- List benefits you actually receive instead of relying only on a generic percentage.
- Compare annual take-home scenarios after realistic business expenses and unpaid weeks.
- Use the result to evaluate contract offers, not just to set a public hourly rate.
Do not compare unlike numbers
- A contractor rate before expenses is not equivalent to an employee wage.
- Long, stable contracts may justify a different risk premium from short engagements.
- Taxes vary by location and structure, so the reserve remains a planning allowance.