Calculator Inputs
Example Data Table
| Scenario | Hourly Rate | Monthly Costs (Living + Business) | Fees/Loss | Tax | Break-even Revenue | Required Hours / Month |
|---|---|---|---|---|---|---|
| Sample setup | $50/hr | $2,300 | 10% | 20% | $2,611.11 | 52.22 |
| Higher rate | $75/hr | $2,300 | 10% | 20% | $2,611.11 | 34.81 |
| More fees | $50/hr | $2,300 | 18% | 20% | $2,866.67 | 57.33 |
Formula Used
This tool estimates the monthly gross revenue (R) you need so that, after fees/losses and taxes, you can cover business costs and pay yourself.
- DeductibleCosts = business fixed + marketing/admin + equipment/education
- TakeHomeTarget = living costs + target savings
- FeesRate = platform fee + processing fee + unpaid loss + variable cost rate
- R = (DeductibleCosts + TakeHomeTarget / (1 − TaxRate)) / (1 − FeesRate)
- RequiredHours = R / HourlyRate
- CapacityHours = HoursPerWeek × WeeksPerMonth × Utilization × (1 − Downtime)
How to Use This Calculator
- Enter your hourly rate and working hours per week.
- Set utilization and downtime based on your actual schedule.
- Add your monthly living costs and business expenses.
- Enter your effective tax rate and typical fee percentages.
- Click calculate to see break-even revenue and required hours.
- Use the buffer values to plan a safer monthly target.
Break-even revenue as a monthly baseline
Break-even is the gross income you must invoice in a month so your business costs, personal living needs, and planned savings are all covered. Because taxes and transaction fees reduce what you keep, the target is higher than your monthly expenses. Treat the output as a minimum viable month, then compare it to your realistic workload and sales pipeline. Many freelancers also use it to decide whether a retainer, project, or hourly quote is sustainable.
Capacity, utilization, and downtime assumptions
Your available hours are not automatically billable. Utilization converts working time into paid delivery time, while downtime accounts for holidays, sick days, and gaps between projects. For example, 40 hours per week, 4.33 weeks per month, 60% utilization, and 10% downtime yields about 93.5 billable hours monthly. If required hours exceed capacity, you must raise rates, reduce costs, or improve utilization. Keeping a time log for two weeks can reveal your true utilization and admin overhead.
Revenue leakage from fees and collections risk
Platforms, payment processing, project materials, and expected unpaid invoices all reduce effective revenue. A combined leakage of 15% means you keep only 85 cents of each billed dollar before taxes and deductible costs. Tracking leakage separately helps you negotiate platform terms, move repeat clients off marketplaces, and tighten invoicing practices to reduce late or missing payments. Even a 2% improvement in collections can fund tools or training each month.
Tax-aware take-home planning
The calculator estimates taxes on profit after deductible business costs. This aligns break-even with the amount you want to take home after taxes for living and savings. If your effective tax rate is 20%, you need $1.25 of pre‑tax profit to net $1.00. Updating the tax rate quarterly keeps targets aligned with changing deductions and income brackets.
Buffers, pricing moves, and stability
Adding a buffer, such as 10%, turns break-even into a safer operating target that absorbs slow months and surprise expenses. Use the “average rate needed” output to test pricing changes: increasing your rate by 10% reduces required billable hours by roughly 9.1%. Combine pricing, a consistent lead funnel, and a three‑month cash reserve to smooth income variability.
FAQs
What does break-even mean here?
It is the monthly gross revenue you need so that, after fees and estimated taxes, you can pay business costs and still cover living expenses plus your chosen savings amount.
Can I use project pricing instead of hourly pricing?
Yes. Keep your hourly rate as a blended equivalent, then enter an average project value to estimate how many projects you need monthly. This supports comparing retainers, fixed bids, and hourly work.
How do I choose a utilization rate?
Track your time for one or two weeks, then calculate billable hours divided by total working hours. Include sales, admin, and learning time. Update the rate as your workflow and client mix changes.
Why include downtime if I already set utilization?
Downtime captures longer breaks such as holidays, sickness, or gaps between contracts. Utilization focuses on day‑to‑day non‑billable work. Using both gives a more realistic ceiling on billable capacity.
How should I set the tax rate?
Use an effective percentage based on recent filings or a conservative estimate. Taxes vary by location, deductions, and income level, so refresh the rate quarterly and confirm with a qualified professional when needed.
What if required hours are higher than my capacity?
Adjust the levers: raise rates, reduce expenses, lower fee leakage, improve utilization, or reduce downtime by strengthening your lead pipeline. If needed, add a retainer product or subcontract lower‑value tasks.