Inputs
Formula used
The calculator treats fees and variable costs as a percentage of gross revenue, and fixed costs as a flat amount per selected timeframe. Reserve set-aside is taken from gross and does not reduce taxes in this planning model.
- G = gross revenue for the timeframe
- F = fixed costs for the timeframe
- d = deductible percentage (variable + platform + processing + write-offs)
- t = effective tax rate
- r = reserve percentage
Taxes = max(Taxable profit, 0) · t
Take-home = (Taxable profit − Taxes) − (G·r)
Required G = (Target + F·(1−t)) ÷ ((1−d)·(1−t) − r)
How to use this calculator
- Pick whether your target is take-home or gross revenue.
- Select a timeframe and enter your target amount.
- Set your working capacity: days, hours, time off, and utilization.
- Add your realistic fees, costs, reserve, and tax estimate.
- Press Calculate and compare required gross with your capacity.
- Adjust rate, utilization, or target until the plan feels achievable.
Example data table
| Scenario | Take-home target (monthly) | Rate | Utilization | Fixed costs | Taxes | Fees + variable | Reserve | Required gross (monthly) |
|---|---|---|---|---|---|---|---|---|
| Balanced | $4,000 | $50/hr | 65% | $350 | 20% | 10% | 10% | $6,740 |
| Higher fees | $4,000 | $60/hr | 60% | $500 | 22% | 18% | 10% | $8,030 |
| Lean setup | $3,000 | $45/hr | 70% | $200 | 18% | 6% | 8% | $4,840 |
These are sample rows for illustration. Your results depend on your real inputs.
Set a take-home goal, then back into gross
Take-home planning aligns with real-life budgeting. This calculator converts a take-home target into required gross revenue by accounting for fixed costs, percentage fees, taxes, and a reserve. Example: a monthly take-home goal of $4,000 with $350 fixed costs, 10% deductible fees and variable costs, 20% tax, and a 10% reserve implies about $6,740 in monthly gross revenue. If your goal is gross instead, the tool skips the conversion and focuses on daily and weekly production targets for accountability during busy seasons.
Utilization turns hours into billable capacity
Utilization is the share of working time you can invoice. With 6 hours per day, 5 days per week, 4 vacation weeks, 1 sick week, and 10 holiday days, you have about 225 working days per year. At 65% utilization, that becomes roughly 73 billable hours per month. Moving utilization from 55% to 70% boosts billable capacity by about 27%.
Translate the target into rates, hours, and projects
Once gross is known, you can see what it demands operationally. If required monthly gross is $6,740 and you have about 73 billable hours, the implied rate is around $92 per hour. Charging $50 per hour would require about 135 billable hours, which may exceed capacity. For fixed-price work, an average project of $1,500 means about 4.5 projects per month; at a 25% close rate, that is roughly 18 qualified leads.
Fees, write-offs, and variable costs compress margin
Percentage-based costs scale with revenue, so they must be priced in. A combined 3% processing fee, 2% write-off allowance, and 5% variable cost consumes 10% of each invoice before taxes. On $7,000 gross, that is about $700. Tracking these “friction costs” helps you decide whether to adjust pricing, payment terms, or offer mix.
Reserve targets protect cash flow
A reserve is a sustainability lever, not a penalty. Setting aside 10% of gross creates a buffer for slow months, equipment replacement, and timing gaps between invoicing and payment. With $7,000 monthly gross, the reserve is about $700; three steady months builds roughly $2,100 of cushion. Review the reserve rate quarterly as utilization, rates, and close rate change.
FAQs
What does utilization mean?
Utilization is the percentage of working time you can actually bill. It captures admin work, marketing, meetings, revisions, and downtime. Higher utilization increases billable hours without extending your schedule.
Should fixed costs be monthly or annual?
Match the fixed-cost number to your selected timeframe. If you choose monthly, enter monthly totals. If you choose annual, enter your full-year totals for subscriptions, insurance, rent, and similar recurring costs.
How do I estimate an effective tax rate?
Use last year’s total tax divided by taxable profit for a practical planning rate. If you are new, start conservative and refine after a few months of income and expense tracking.
Why isn’t the reserve treated as tax-deductible?
The reserve is modeled as money you set aside from gross revenue, not an expense. If your local rules differ, adjust the tax rate input to reflect your real after-tax experience.
How does other income change the result?
Other income reduces the revenue you must earn from freelance work for the same goal. Examples include retainers, royalties, part-time income, or any guaranteed amount you want to apply to the target.
Can I use this for mixed pricing models?
Yes. Use hourly rate for time-based work, and add average project value plus close rate for fixed-price work. You can also treat a retainer as other income and plan the remainder with projects or hours.