Freelancer hourly rate formula (Romania): a practical method

“How much should I charge per hour?” becomes easy once you stop thinking per hour and start thinking per year.

As an IT contractor, you’re not selling hours. You’re selling outcomes and availability, and your rate needs to cover:

• taxes and contributions (depending on PFA/SRL setup)
• downtime (vacation, sick days, gaps between clients)
• business costs (tools, equipment, accounting)
• non-billable time (sales, admin, learning)

This guide gives you a practical formula and a way to sanity-check your number.

TL;DR

• Start from your target annual take-home (salary-equivalent).
• Add realistic annual costs (taxes + business expenses).
• Divide by realistic billable hours (not 40h * 52).
• Sanity-check against market rates and fix contract terms (scope + payment terms) before you blame the number.
• Use:
  • Freelancer hourly rate calculator

Step 1: Decide your target annual “salary-equivalent”

Your target is what you want to “take home” in a year, including:

• vacations
• a buffer (unexpected downtime)
• any personal financial goals (savings, big purchases)

Practical tip: choose two targets:

• conservative (covers essentials + buffer)
• ambitious (what you want in a strong year)

Step 2: Estimate your annual costs (don’t forget hidden ones)

Your rate must cover:

• taxes/contributions (depends on PFA/SRL and current year rules)
• accounting (monthly fees, annual declarations)
• tools/subscriptions (IDE, SaaS, cloud)
• equipment (laptop replacement, peripherals)
• insurance (optional, but common for some clients)
• coworking/travel (if relevant)
• non-billable time (sales calls, interviews, proposals, admin)

If you don’t estimate these, you’ll accept a “nice” hourly rate that becomes mediocre after reality.

Romania-specific setup: PFA vs SRL (2025).

Step 3: Choose billable hours (don’t lie to yourself)

The most common mistake is assuming: 40 hours/week * 52 weeks = 2,080 billable hours.

That’s not realistic because:

• vacations exist
• sick days happen
• client work isn’t 100% billable (meetings, planning, context switching)
• there are gaps between projects

A conservative baseline many contractors use:

• 10–11 billed months/year, not 12
• 60–80% billable utilization (depending on role and client setup)

If you want a simple model: billable hours/year = working hours/year * utilization

Track actual utilization with the timesheet.

Step 4: Compute your rate (formula you can reuse)

At a high level:

hourly rate = (target take-home + annual costs + taxes buffer) / billable hours

You can implement this directly in the freelancer hourly rate calculator.

Step 5: Convert hourly ↔ day rate (and avoid confusion)

Some clients negotiate day rates. Decide your “standard day”:

• 8 hours/day is common, but not universal

day rate = hourly rate * billable hours per day

If your days include meetings and you still bill the day, the “billable hours per day” can be 6–7 rather than 8. The key is consistency with the contract.

Worked example (simple but realistic)

Assume:

• target take-home (salary-equivalent): 250,000 RON/year
• annual business costs (tools, accounting, equipment): 25,000 RON/year
• billable hours/year: 1,400

Then your required revenue/hour is: (250,000 + 25,000) / 1,400 ≈ 196.4 RON/hour (before considering tax structure details).

If your setup/taxes require more gross revenue to hit that net, your hourly needs to go up. That’s exactly what the calculator is for.

Sanity-check: market, seniority, and currency

After you compute the number, sanity-check it:

• Does this match your seniority and niche?
• Is the client local (RON) or international (EUR/USD)?
• Are you pricing in a stable currency but paying costs in RON?

Practical advice:

• if you quote in EUR/USD, define the exchange-rate logic (invoice date rate, fixed rate, etc.)
• if your costs are in RON, build exchange-rate buffer into the rate

Pricing hygiene checklist (contract terms matter)

Even the “right” rate fails if the contract is messy.

Checklist:

• payment terms are clear (Net 15 / Net 30) and enforceable
• scope is defined (avoid “do everything”)
• acceptance is defined (what counts as “done”)
• you’re not forced into employee-like constraints without protections
• you can increase rate yearly (inflation, seniority, scope growth)

Tools that help with the workflow:

What to do if the market rate is below your computed rate

You have three options:

1. Increase billable utilization (reduce non-billable time)
2. Reduce costs (tools/process) without harming quality
3. Change positioning (niche, outcomes, client type) to justify higher pricing

Lowering your rate without changing anything else is the fastest way to burn out.

Next steps

After you set your rate, continue with PFA vs SRL (2025) to see how taxes change by setup, track hours in the Timesheet, and use CIM vs B2B in IT (Romania): how to choose as a reference if you’re negotiating a switch.