Figurely

Freelancer Day Rate Calculator

The pre-tax earnings you want the business to generate for you over a year — the equivalent of a salary, before tax and National Insurance. Not your post-tax take-home.

Yearly overheads the rate must also cover: software, equipment, insurance, accountant, training, subscriptions. Exclude your own pay (that's the income figure above).

Days you realistically expect to invoice — far fewer than working days once you remove holiday, sickness, admin, marketing and gaps between clients.

Chargeable hours in a working day. Used only to convert the day rate into an equivalent hourly rate.

Try a scenario:
— Day rate
— Equivalent hourly rate
Required annual billing — Total you must invoice in a year — your target income plus all business costs.

Enable JavaScript to calculate instantly. The full method is explained below, so the page is useful either way.

The classic freelancer pricing mistake is dividing a target salary by the number of working days in a year — roughly 260 — and quoting that as a day rate. It feels logical and it is badly wrong. It ignores that you cannot bill every working day: holiday, illness, admin, invoicing, marketing, proposals, training and the dead time between contracts all eat into the year. It also ignores that, unlike an employee, you personally pay for software, equipment, insurance, an accountant and your own pension. Price off 260 days and zero overheads and you have quietly signed up to earn far less than the salary you were aiming for, while carrying all the risk of self-employment.

This calculator works the problem backwards from the answer you actually care about. You state the pre-tax income you want the business to produce for you and the yearly cost of running it; it adds those together to get the total you must invoice, then divides by the days you can realistically bill — not the days you could theoretically work. The result is a defensible day rate and an equivalent hourly rate. One honest caveat up front: this is rate-setting arithmetic for UK freelancers and contractors, not tax advice — income tax and National Insurance are out of scope; see the assumptions.

How this calculator works

Three steps, all transparent:

Required annual billing = target annual income + annual business costs. This is the turnover the business must produce so that, after paying its overheads, what's left equals the income you wanted.

Day rate = required annual billing ÷ billable days per year. Spreading the total you must invoice across only the days you can actually charge for is the step the naïve 260-day method skips. If you enter zero billable days the calculator asks for a realistic number instead of dividing by zero.

Equivalent hourly rate = day rate ÷ billable hours per day. This is purely a conversion for hourly engagements; if the day rate can't be computed, the hourly figure carries the same caveat rather than showing a misleading number.

Worked example

Suppose you want a £45,000 pre-tax income and your yearly business costs (software, insurance, accountant, equipment) come to £6,000. Required annual billing = £45,000 + £6,000 = £51,000. You estimate you can realistically bill 220 days a year once holiday, admin and pipeline gaps are removed. Day rate = £51,000 ÷ 220 = £231.82. Across a 7.5-hour billable day that is £231.82 ÷ 7.5 = £30.91 per hour. Note how far this is from the naïve sum: £45,000 ÷ 260 working days = £173 — a rate that would leave you roughly £13,000 short once costs and unbillable days are accounted for.

Assumptions & limits

  • Not tax advice. The figures are pre-tax business billing. Income tax, National Insurance, VAT and pension contributions are deliberately ignored — treat "target income" as the pre-tax earnings the business must generate, and take separate advice on what you keep after tax.
  • Billable days are far fewer than working days. A year has ~260 working days but most freelancers bill 200–230 after holiday, sickness, admin, marketing and gaps between clients. Be honest here — optimism inflates the day rate you'll actually achieve and understates the one you should charge.
  • Costs and income are annual and steady. A single average year is modelled. Lumpy equipment purchases, ramp-up periods, or a deliberate profit margin on top of your salary aren't included — add them to costs or income if you want them in the rate.

Frequently asked questions

How many billable days should I assume?
Start from ~260 working days, then subtract holiday (often 25–30 days), public holidays (~8), an allowance for sickness, and crucially the unbillable time you spend on admin, invoicing, marketing, proposals and gaps between contracts. Most established freelancers land at 200–230 billable days; newer ones, lower. Use a figure you can defend, not the one that makes the rate look good.
Is "target income" before or after tax?
Before tax. It is the pre-tax earnings the business must produce for you — the rough equivalent of a gross salary. This tool deliberately ignores income tax and National Insurance because they depend on your circumstances; treat the output as a billing target and take separate tax advice on take-home.
Why not just divide my old salary by 260?
Because you can't bill 260 days and, unlike an employee, you fund your own software, equipment, insurance, pension and accountant. Dividing salary by 260 with no costs typically underprices you by 25–40%. Working backwards from required billing over realistic billable days is the honest method.
Should I add a profit margin on top?
This calculator covers your income and costs — it gets you to break-even on the life you want, not to a business surplus or a buffer for lean months. If you want a margin for reinvestment or risk, add it to either the target income or the business costs and the rate will reflect it.