Net Rate Target
Most freelancers price from a salary number, then discover the tax, fees and unpaid admin hours ate the difference. This runs the math backward: pick the take-home you need, get the rate that actually delivers it.
Self-employment tax of 15.3% is added on top of the income tax rate you enter, so a 15% bracket is really a 30.3% first-dollar cost on your invoices. Half of self-employment tax is deductible, which this treats inside your marginal rate.
How the math works
- Billable hours = working hours × (1 − unpaid admin %). Ninety hours at 15% admin is 76.5 hours you can invoice, and the rate has to carry all 90.
- Gross needed = (target take-home + fixed costs) ÷ (1 − processor fee − income tax rate − 15.3% self-employment tax). The division is the point: a 30% all-in cost means 70 cents of every invoice dollar is yours, so you divide, you do not subtract.
- Rate = gross ÷ billable hours. The check row re-runs the math forward so you can see the take-home the rate produces, and adjust from there.
- Processor fees apply to card payments only; invoicing by ACH or bank transfer is near zero, which is why many independent contractors bill 2.9% back into their rate for every client and treat ACH as a bonus.
- What is not in here: health insurance, retirement contributions, paid time off, and the client-payment lag. Add them to "fixed costs" if you want the rate to cover them.
Why is my freelance rate so much higher than my W-2 hourly wage?
Because on a W-2 your employer pays half of your payroll tax, part of your health coverage, your paid time off and the admin time. Freelance carries all of it on your invoices: 15.3% self-employment tax, card fees, unpaid admin hours, and no paid vacation. A $45 salaried hourly equivalent lands near $65-$75 as a freelance rate, and this tool shows the arithmetic.
What processor fee should I assume?
2.9% + $0.30 per card transaction is the common baseline, plus monthly fees for invoicing tools. Invoice by bank transfer for larger projects and the fee drops to near zero, which lowers the rate you need to hit your target.
How is this different from the effective hourly rate tool?
The effective hourly tool runs forward, a project you already have, and shows what it really pays per hour of your life. This one runs backward from a target take-home and outputs the rate you must quote. Quote from this tool, then check each project with that one.