Reverse-Engineering Your Income Target
To hit a ,000 net income goal, you cannot just bill ,000. You must account for expenses (software, hardware, health insurance) and taxes (self-employment and income tax). If your taxes and expenses total ,000, your gross revenue goal is ,000. Next, calculate your billable weeks (52 weeks minus holidays, sick leave, and vacation). If you take 4 weeks off, you have 48 billable weeks.
Calculating Billable vs. Non-Billable Hours
A major mistake new freelancers make is assuming they can bill 40 hours a week. In reality, you spend 20-30% of your time on admin, marketing, pitching, and invoicing. A realistic target is 25-30 billable hours per week. If you have 48 weeks and bill 25 hours a week, you have 1,200 annual billable hours. To earn ,000 gross, your target rate is ,000 / 1,200 = .33 per hour.