| Scenario | Net Target (Annual) | Taxes | Expenses | Utilization | Weeks | Required Hourly |
|---|---|---|---|---|---|---|
| Starter | USD 45,000 | 18% | 10% | 55% | 46 | USD 46.50 |
| Growth | USD 75,000 | 22% | 12% | 65% | 48 | USD 63.90 |
| High Buffer | USD 90,000 | 25% | 15% | 60% | 44 | USD 86.20 |
This calculator estimates the gross revenue you need to hit a desired net income.
Percent inputs are planning estimates. Real outcomes vary by invoicing, deductions, and cashflow timing.
- Enter your target annual net income and pick a currency.
- Set tax, expenses, savings, and platform fee assumptions.
- Choose your weekly hours, utilization, and working weeks.
- Optionally add an average project fee for project counts.
- Press Calculate to see required revenue and hourly rate.
- Use CSV or PDF to save results for planning discussions.
Revenue Targets and Net Retention
Freelance planning starts with a clear net target, then works backward to required gross revenue. Net retention reflects how much of each invoiced dollar remains after taxes, operating costs, savings allocations, and processing fees. If combined deductions total 35%, retention is 0.65, so a 60,000 net target requires about 92,308 gross before any safety margin. Add a 10% buffer and the same target becomes about 101,538 gross, helping you absorb slow quarters.
Billable Capacity and Utilization
Most freelancers overestimate billable hours. Utilization is the share of total working time spent on client delivery, excluding proposals, admin, learning, and downtime. At 40 hours weekly and 60% utilization, billable time is 24 hours. With 46 working weeks, capacity is 1,104 billable hours per year, which anchors sustainable rate decisions. Many solo operators land between 50% and 70%; moving from 55% to 65% can lower required rates by roughly 15%.
Rate Setting and Market Positioning
Required hourly rate equals annual gross needed divided by annual billable hours. For example, 95,000 gross across 1,100 billable hours implies roughly 86 per hour. Compare that figure to market benchmarks for your niche, experience level, and geographic demand. If it is above your current pricing, increase utilization, raise package value, or narrow scope.
Project Mix, Pricing Models, and Volume
Average project fee translates annual targets into a project pipeline. If average fees are 1,500, a 90,000 gross goal needs about 60 projects annually, or five projects per month. Higher-ticket retainers reduce volume pressure and stabilize cashflow. Consider mixing fixed-fee packages with hourly overflow to protect margins when scope expands. If your close rate is 25%, landing five projects monthly may require about 20 qualified leads per month.
Monitoring, Adjustments, and Risk Controls
A buffer accounts for churn, late payments, and seasonal demand swings. A 10% buffer raises gross targets proportionally and reduces the chance of missing the net goal. Review assumptions quarterly: update tax estimates, track expense ratios consistently, and measure utilization from timesheets. Use the exports to document scenarios and set monthly outreach targets. Track three KPIs: effective hourly rate, average days-to-pay, and pipeline coverage, then adjust pricing or outreach early.
What does utilization mean in this calculator?
Utilization is the percent of your working hours that are billable. It excludes admin, sales calls, learning, and breaks. Higher utilization increases billable hours and usually lowers the hourly rate required to reach your income target.
How should I estimate my tax rate?
Use an effective rate based on prior returns or a conservative planner estimate. Include income tax and any required self-employment contributions. If you are unsure, start higher, then refine quarterly using actual paid amounts.
What counts as operating expenses?
Include tools, subscriptions, equipment, coworking, subcontractors, marketing, insurance, and travel tied to client work. Exclude personal spending. If expenses vary, average them over the last three to six months for a stable percentage.
Why add a buffer percentage?
A buffer protects your plan against cancellations, late invoices, and seasonal dips. It increases the gross target so missing a few billable weeks does not derail the net income goal.
Is hourly rate the best pricing method?
Not always. Hourly is useful for scoping and overflow work. For predictable deliverables, fixed-fee packages or retainers often improve earnings by pricing outcomes instead of time and by reducing negotiation on every task.
How can I lower the required rate without lowering my goal?
Improve utilization, raise average project value, reduce nonessential expenses, or extend working weeks. You can also create retainers, productized offers, and faster delivery workflows to increase effective hourly earnings.