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What to Charge as a Freelancer
Your rate decides what every invoice can earn, so it is worth working out on purpose rather than copying a number from a job board. This guide covers the formula that turns a rate into an invoice total, a method for setting your hourly rate from an income goal, and the tax rates to price in. If you already know your rate and want a full invoicing workflow with VAT, discounts and currency conversion, follow the freelance invoice calculator workflow.
The Hourly Invoice Formula
For time-based billing, the formula is simple:
Subtotal = Hourly Rate × Hours Worked
Tax = Subtotal × (Tax Rate / 100)
Total = Subtotal + Tax
Example: Web Development Project
You charge $85/hour and worked 32 hours with a 10% sales tax:
| Note | Result |
|---|---|
| hourly rate = 85 | 85 |
| hours = 32 | 32 |
| subtotal = hourly rate × hours | 2,720 |
| tax = subtotal × 10% | 272 |
| subtotal + tax | 2,992 |
The right pane resolves subtotal to 2,720, tax to 272, and subtotal + tax to 2,992.
Setting Your Hourly Rate
To determine a fair hourly rate, consider:
- Target annual income: How much you want to earn
- Billable hours: Often only about 60-70% of your work time is billable
- Expenses: Software, equipment, insurance, taxes
| Note | Result |
|---|---|
| desired income = $80,000 | $80,000 |
| expenses = $10,000 | $10,000 |
| self employment tax = 15.3% | 15.30% |
| billable hours = 1200 // about 25 hours a week | 1,200 |
| before tax = desired income / (1 - self employment tax) + expenses | $104,451.00 |
| before tax / billable hours | $87.04 |
Only the income goal is divided by 1 - self employment tax. Business expenses are deductible, so they are not taxed as profit: add them after the gross-up rather than before.
Common Freelance Tax Rates
Tax obligations vary by location, but common rates include:
| Type | Typical Rate |
|---|---|
| US Self-Employment Tax | 15.3% |
| VAT (EU, standard rates) | 17-27% |
| GST (Australia) | 10% |
| HST (Canada) | 13-15% |
Tips for Better Invoicing
- Track time accurately: Use time tracking tools and round to the nearest 15 minutes
- Include payment terms: Net 15 or Net 30 days
- Itemize services: Break down hours by task type
- Add late payment fees: Typically 1-2% per month
Free Invoice Calculator
Calculate your freelance invoice total with tax.
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Example
$75/hour × 40 hours with 8% tax:
| Note | Result |
|---|---|
| hourly rate = 75 | 75 |
| hours = 40 | 40 |
| subtotal = hourly rate × hours | 3,000 |
| tax = subtotal × 8% | 240 |
| subtotal + tax | 3,240 |
The right pane resolves subtotal to 3,000, tax to 240, and subtotal + tax to 3,240.
Frequently Asked Questions
How do I calculate my freelance hourly rate?
Start with your desired annual income and gross it up for self-employment taxes (typically 15.3% in the US), then add business expenses, which are deductible and so need no tax gross-up, and divide by the number of billable hours you expect per year. Many freelancers plan for roughly 1,000 to 1,200 billable hours a year, which leaves room for non-billable time like marketing and administration.
Should I charge hourly or per project?
Both have advantages. Hourly billing is simpler and protects against scope creep. Project-based pricing rewards efficiency and can be more profitable. Many experienced freelancers use project-based pricing once they can accurately estimate the time required.
What should I include on a freelance invoice?
Include your name and contact details, the client’s information, a unique invoice number, itemized list of services with hours and rates, subtotal, applicable taxes, total due, payment terms (Net 15 or Net 30), and your preferred payment method.
Calculate Invoices in Notes Calculator
Notes Calculator’s variables, percentages, and total function make it a natural fit for freelance invoicing:
| Note | Result |
|---|---|
| hourly rate = $90 | $90 |
| // Week 1 | |
| design hours = 14 | 14 |
| development hours = 22 | 22 |
| hours worked = design hours + development hours | 36 |
| subtotal = hourly rate * hours worked | $3,240 |
| // Tax & total | |
| tax rate = 10% | 10% |
| tax = subtotal * tax rate | $324 |
| subtotal + tax | $3,564 |
With Lifetime, keep one note per client, and headings (#) to separate months or projects. The total keyword sums all consecutive numbers above it: perfect for adding up line items. Notes Calculator also supports currency symbols and converts between 200+ currencies, so you can type $3564 in € to quote international clients.
See how it compares to spreadsheets in our notepad calculator vs spreadsheet guide.
Pricing a paid session before it becomes an invoice? Use the workshop quote template to separate delivery, preparation, materials, and a minimum price. Need to calculate profit margins on your freelance projects? Try our profit margin calculator. For understanding how your savings grow over time, check the compound interest calculator.