Freelancer Hourly Rate Calculator

TL;DR

Estimate an hourly rate from:

• your target monthly net
• billable hours per month
• overhead percent (non-billable time + costs buffer)

Formula used: (target_net × (1 + overhead)) / billable_hours.

Who this is for

• Freelancers setting an initial hourly rate.
• Contractors converting a net target into a sellable rate.
• Anyone who keeps saying “my day rate is too low” but can’t quantify why.

How to use it

1. Set a realistic target monthly net (after taxes and costs you care about).
2. Enter billable hours per month (be honest: meetings, sales, admin reduce billable time).
3. Add overhead percent (buffer for tools, accounting, downtime, taxes uncertainty).

The mental model (how pros set rates)

Freelancer pricing is basically a risk and capacity problem:

• You don’t bill 160h/month.
• You have downtime, admin, sales, sick days, holidays, context switching.
• You have costs (accounting, software, hardware, coworking, insurance).
• You have tax/administrative constraints depending on PFA/SRL and VAT status.

So the question is not “what hourly rate do I like?” — it’s “what hourly rate achieves my target net with realistic utilization?”

Billable hours: the number that makes or breaks your rate

If you assume 160 billable hours, you will underprice. Common utilization ranges for solo freelancers (varies a lot by niche and client stability):

• stable retainer work: higher billable hours
• project-based work: lower billable hours (more sales + gaps)

If you’re not sure, start conservative and adjust after 2–3 months of real tracking. Use Monthly time log to measure your true billable vs non-billable time.

What to put in “overhead %”

Overhead is your buffer for things that aren’t billable but are real:

• unbilled time: sales, proposals, calls, admin, invoicing
• operational costs: accountant, software licenses, bank fees
• business resilience: vacation, sick time, “between projects” gaps
• tax uncertainty / future changes (especially for Romania-heavy tax regimes)

If you already track costs precisely, you can lower overhead and handle costs explicitly. If you don’t, overhead is a practical safety margin.

From hourly rate to day rate / monthly retainer

Clients often think in different units:

• Hourly rate → good for variable scope
• Day rate → common for contracting (e.g., 8 hours = 1 day, but confirm your contract)
• Monthly retainer → best for predictable income

Once you have an hourly rate, you can convert:

• day_rate = hourly_rate × hours_per_day
• monthly = hourly_rate × expected_billable_hours Then sanity-check with Compare PFA vs SRL (2025) and Estimate PFA taxes (2025) to see if the net outcome matches your target.

Worked examples

Example 1: 15,000 RON net target

Target 15,000; billable 120h; overhead 20% → rate ≈ 150 RON/h.

Example 2: fewer billable hours

If billable hours drop to 80h, rate needs to increase significantly.

Example 3: overhead sensitivity

Try 10% vs 30% overhead to see how “buffering” affects your pricing.

Example 4: retainer stability vs project work

If you have a single retainer client, you may be able to assume higher billable hours (and a lower overhead). If you have project-based clients, your billable hours and overhead should be more conservative.

Edge cases & gotchas

• Hourly rate is not profit; it must cover downtime and taxes.
• If you invoice with VAT, VAT is on top; don’t confuse it with your rate.
• Consider minimum commitment (retainers) if you want predictable income.
• Currency matters: if you price in EUR but spend in RON, consider FX risk (buffer it in overhead or price in EUR).

FAQ

Should I price hourly or daily?

Depends on client expectation. You can derive day rate from hourly (e.g., 8h/day) but confirm your contract.

How do taxes fit into this?

This tool gets you a “sellable” rate from a net target and utilization assumptions. To model taxes more precisely, use:

• Compare PFA vs SRL (2025)
• Estimate PFA taxes (2025)
• VAT: net ↔ gross (2025) (if VAT applies in your invoicing)

Should I include VAT in my rate?

Typically no — you quote “+ VAT” (or “VAT included”) separately. VAT is a tax on the invoice, not your revenue. Clarify this in writing to avoid confusion.

What next?

Use Compare PFA vs SRL (2025) to sanity-check after-tax outcomes.

Sources

• Rate formula

Next steps (IT Jobs List)

For hourly rate, the most important input is utilization (billable hours). Set it realistically before drawing conclusions.

Related tools

Related guides

Quick recommendation

• Save your assumptions (rates, breaks, thresholds) so you can reproduce the result.
• If you use the output in an invoice/offer, include a short explanation (what’s included and what’s not).

Practical checklist (IT Jobs List)

• Set realistic utilization (billable hours). For many freelancers, 50–70% is more realistic than 90%.
• Include unpaid time: presales, admin, learning, vacation.
• Cross-check your rate with a PFA/SRL taxes scenario (taxes + VAT).