Calculator
Career PlanningExample data table
| Monthly fixed | Take-home target | Tax | Savings | Utilization | Billable hours | Break-even rate |
|---|---|---|---|---|---|---|
| 1,200 | 30,000 | 18% | 10% | 75% | 690 | 97.39 |
| 1,800 | 40,000 | 22% | 12% | 70% | 644 | 135.55 |
| 900 | 25,000 | 15% | 8% | 80% | 736 | 70.19 |
Formula used
How to use this calculator
- Enter your monthly fixed expenses and yearly business costs.
- Add your desired take-home income for the year.
- Set tax and savings rates that match your situation.
- Estimate billable hours, weeks, and your utilization rate.
- Optionally add project hours and variable project costs.
- Press submit to see results above the form.
- Use CSV or PDF buttons to save your report.
Why cost recovery matters
Freelancers often price from intuition, not from totals. Cost recovery converts every recurring expense into a yearly baseline, then adds the take-home income you want. That baseline turns vague pricing into a measurable target. When costs are mapped, you can explain rate changes to clients and avoid discounting below sustainability. Small renewals, banking fees, and replacement budgets matter when spread across limited billable hours. It also supports planning for slower seasons ahead.
Utilization drives hourly targets
Utilization is the share of working time that becomes billable. Proposals, admin, and marketing reduce it. This calculator estimates annual billable hours as hours per week times working weeks, multiplied by utilization. If utilization falls from seventy five to sixty percent, the same revenue must be earned in fewer hours, so the break-even rate rises. Tracking utilization monthly helps you spot pipeline gaps and decide whether to raise rates or change workload.
Taxes and savings need space
Gross revenue is not take-home. Taxes, retirement, and an emergency buffer should be reserved before spending. The calculator uses a retention factor equal to one minus tax rate minus savings rate. Gross required equals costs plus take-home, divided by retention. This keeps planning conservative and reduces cash shocks. If you are uncertain, start slightly higher, then refine after several billing cycles.
Profit margin protects scope
Break-even is a floor, not a quote. A quoting margin covers estimation error, client delays, revisions, and occasional unpaid work. Margin also funds better tools, subcontractors, and marketing experiments that improve utilization. For fixed-price work, multiply the quoted hourly rate by expected project hours, then add variable project costs. Review time tracking to update expected hours and reduce underquoting.
Using results for decisions
Use break-even to filter leads. If a budget is below break-even, the project must offer strategic value, such as a portfolio upgrade or a stable retainer. Compare the suggested project quote with past invoices to validate assumptions. When the target feels high, first review utilization and expenses, because those usually drive the increase more than take-home goals. Save CSV or PDF reports and update inputs quarterly.
FAQs
What is a break-even hourly rate?
It is the minimum rate needed to cover business costs and your take-home goal after accounting for taxes and savings, based on expected billable hours.
How do I estimate utilization accurately?
Track a typical month: billable hours divided by total working hours. Include proposals, admin, meetings, and marketing. Use the average of several months for stability.
Should I include nonrecurring equipment purchases?
Yes. Spread the purchase across the years you expect to use it, or add an annual replacement budget. This prevents large expenses from breaking your cash flow.
Why add a profit margin if I already meet my target?
A margin protects you from scope creep, slower payments, and estimate errors. It also funds upgrades, outsourcing, and marketing that improve utilization and future income.
Can I use this for fixed-price projects?
Yes. Use the quoted hourly rate and multiply by expected project hours, then add variable project costs. Compare the result with your client’s budget and adjust scope.
How often should I update my inputs?
Review quarterly or after major changes like new tools, pricing shifts, or workload changes. Small updates keep your rates realistic and prevent surprise shortfalls.