Freelance / Contractor Rate Calculator
Work out the minimum day rate and hourly rate you need to charge.
How this is calculated
Your desired take-home is grossed up to the pre-tax profit needed to leave that much after tax, then annual overheads are added on top to get total required billings. Dividing that by your billable hours or days per year gives the minimum rate you need to charge.
It's worth benchmarking your target income against what an employer actually pays for an equivalent role, not just the advertised salary. A £50,000 salary typically costs a UK employer closer to £60,000 once employer National Insurance contributions, pension contributions, and other statutory costs are included — commonly called the "on-cost" or employment cost multiplier. Freelance rates need to cover this same gap (plus your own overheads, non-billable time, and the lack of employee benefits like paid holiday and sick leave), which is why a freelance day rate that looks generous on paper often works out closer to an equivalent salaried role once all these factors are accounted for. For salary benchmarks to compare against, see the Salary Negotiation Brief and the Graduate Salary by Degree Field calculator.
Frequently asked questions
- Why is required revenue higher than my desired take-home plus overheads?
- Because take-home is what's left after tax. To have a given amount left over post-tax, your pre-tax profit needs to be grossed up first — then overheads are added on top, since they reduce taxable profit rather than your take-home directly.
- Why isn't all my time billable?
- Freelancing includes unpaid time: admin, invoicing, finding clients, holidays, and sick days. Billable hours per week and weeks per year should reflect only the time you can realistically charge clients for, not your total working time.
- Should I quote hourly or daily rates?
- Both are shown here — day rates are common for longer engagements and reduce the incentive to work slowly, while hourly rates suit smaller or more variable pieces of work. Use whichever your market and client expect.
- Can I use this in my own app?
- Yes — every calculator on Stupidly Clever has a matching REST API and MCP tool that runs the same underlying logic.
- How is the daily rate calculated?
- Your desired take-home income is grossed up for tax to find the pre-tax profit needed, annual overheads are added on top, and the total is divided by your billable days per year (weeks worked × billable hours per week ÷ 8) to get a day rate.
- What expenses should I factor into my rate?
- Include software subscriptions, insurance, equipment, accounting/admin fees, marketing or business development costs, and a contingency for slow periods — anything that's a real cost of running your freelance business, entered as annual overheads.
- What is a good utilisation rate to assume?
- A realistic assumption for most freelancers is 50–70% of total working hours actually billable, once time for admin, invoicing, finding clients, and gaps between projects is accounted for — assuming 100% utilisation when setting your rate is one of the most common mistakes freelancers make.
- How does VAT affect my quoted rate?
- If you're VAT-registered, VAT is typically added on top of your quoted rate rather than absorbed into it — for B2B clients who can reclaim VAT, this doesn't affect the economics of your rate, but it's worth clarifying with clients whether your quoted figure is VAT-inclusive or exclusive.