Multiply your hourly rate by billable hours per week, then by weeks worked per year. The freelancer version is rate × billable hours × working weeks — not 40 × 52, because you don't bill every working hour or work every week. To compare against employee salaries, divide the result by (1 + benefits gap), since employees receive benefits worth roughly 25–35% of salary that freelancers fund themselves.

Because an employee's salary is only part of their compensation. Employers typically pay for health insurance (in full or in large part), retirement plan matches, paid vacation and sick leave, and the employer's 7.65% share of Social Security and Medicare taxes. A freelancer earning the same gross number pays all of that out of pocket — so $108,000 freelance ≈ $83,000 salary at a 30% gap. Ignoring this is the most common way freelancers undervalue themselves in salary negotiations.

25–35% covers most situations: ~8% employer payroll taxes, ~8–12% health insurance, ~3–6% retirement match equivalent, and ~4–8% paid time off. Use 25% if you're young, healthy, and skip paid vacations; use 35%+ if you buy expensive individual health coverage or take generous time off. If you know your actual annual benefits spending, divide it by your gross and use that exact figure.

Billable hours are hours a client pays for — project work, billed meetings, billable revisions. Working hours include everything else: writing proposals, invoicing, bookkeeping, marketing, networking, learning new tools, and downtime between projects. Most freelancers bill 50–75% of their working hours. Your utilization rate measures exactly this ratio — check it if your billable-hours guess feels like a guess. Tracking both numbers for a month in a simple time log usually reveals 5–10 hidden non-billable hours per week you forgot you were working.

For most established freelancers, 20–30 billable hours out of a 35–45 hour working week. Beginners often bill fewer while they market themselves; specialists with retainers and productized services can bill more. Anyone claiming 40+ billable hours weekly, every week, is either counting non-billable time as billable or heading for burnout. When in doubt, use last quarter's actual invoiced hours divided by weeks.

Start from 52 and subtract: vacations, public holidays, sick days, and realistic gaps between projects. 46–48 weeks is typical for a freelancer who takes a proper holiday; 44 or fewer if your work is seasonal or project-based with long sales cycles. Counting all 52 weeks is the fastest way to overestimate income by 8–15%.

Reverse the formula: (target salary × 1.30) ÷ annual billable hours. Example: you want the equivalent of a $90,000 salary and bill 1,400 hours/year → ($90,000 × 1.30) ÷ 1,400 = $83.57/hr. That's the rate that truly matches the salary. The minimum acceptable rate calculator builds this up from your actual expenses instead.

No — it compares gross freelance income to gross salary, before income tax on either side. Taxes depend on your country, profit, deductions, and filing status. For US freelancers, run the result through the effective tax rate calculator to see take-home; for UK readers the UK self-employed tax calculator does the same.

No. 2,080 is the employee full-time year: every hour paid, including vacation, sick days, and training. A freelancer billing $75/hr × 2,080 = $156,000 exists only on paper — real billable years run 1,000–1,500 hours. Pricing off 2,080 makes your required rate look lower than it is, which is how freelancers accidentally accept rates that don't cover their year. Work it backwards instead: decide the annual income you need, divide by your realistic billable hours (1,000–1,500 for most), and that quotient is the minimum rate your business can survive on.

Directly: every unpaid week off cuts both your gross and your equivalent salary. That's why weeks-per-year is an input, not an assumption. Four unpaid weeks at $2,250/week costs $9,000 of annual gross. Employees get paid vacation; freelancers pre-fund it through their rate — another reason the day rate for short engagements should exceed the pro-rata salary figure.

Almost always find more clients or raise the rate, not lower it. Cutting your rate to fill hours trains the market to expect the lower price while your costs stay fixed. Low utilization usually means a pipeline problem (marketing, positioning, proposals), not a pricing problem. Check your utilization rate first — if it's under 50%, fix lead flow before touching the rate.

No. This is an arithmetic planning tool: it multiplies the numbers you enter by the benefits-gap assumption you choose. It doesn't know your tax situation, debts, savings goals, or local cost of living, and the benefits gap is an estimate, not a quote. Use it to frame negotiations and goals, not to make binding financial commitments.