What rate makes freelance work sustainable?

Work backward from personal pay, business costs, time off, billable hours, unpaid invoices, and money kept in the business.

Hourly rate floor for the entered plan

$89.67 / hr

1,200 paid client hours across 48 working weeks.

Annual invoice target: $107,602
Share of work time clients pay for: 62.5%
Typical project floor: $3,587

See the full calculationFollow each number from the inputs to the answer.

Calculation 1

Find the hourly rate floor

What are we finding?

We are finding the lowest modeled billable rate that can cover the entered pay goal, business costs, unpaid invoices, and business reserve.

What do these numbers mean?

Personal pay goal: $80,000: Money wanted for personal pay before personal tax.
Business costs: $12,000: Yearly business bills paid before personal pay.
Invoices collected: 95%: 95% means 95 out of every 100 invoiced dollars are expected to arrive.
Business reserve: 10%: 10% of collected money stays in the business.
Paid client time: 1,200 hours per year: Working weeks times the hours each week that can be billed to clients.

How do we calculate it?

Add the pay goal and business costs. Increase the target so the business reserve can stay untouched. Increase it again for invoices that may not be collected. Divide by yearly billable hours.

hourly floor = ((pay + costs) ÷ kept share ÷ collection share) ÷ billable hours

$107,602 ÷ 1,200 hours

$80,000 plus $12,000 requires $92,000 after business costs.
After the 10% reserve and 95% collection assumption, the business must invoice $107,602.
48 working weeks times 25 paid client hours gives 1,200 paid client hours.
$107,602 divided by 1,200 hours equals $89.67 per hour.

Final answer

$89.67 per billable hour

What does the answer mean?

This is an internal revenue floor, not a promise that the market will accept the rate. Taxes, demand, and the value of the work still matter.

Your working model

Personal pay is before personal income tax. Paid client time must fit inside total working time, which also includes sales, administration, learning, and client communication.

Personal annual pay target before tax

Yearly business costs

Weeks without billable work

weeks

Total work hours each week

hours

Billable hours each working week

hours

Invoices you expect to be paid

Paid invoice money kept in the business

Current or proposed hourly rate

Hours in a typical project

hours

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Hourly rate and paid client hours

Every point holds pay, costs, collection, reserve, and weeks off constant.

Lowest workable rate by paid hoursCurrent or proposed rate

Main takeaway: more hours that a client pays for can lower the hourly rate needed. Unpaid work time does not have that effect.

What this means

The result separates an internal revenue floor from a real market price.

Check this carefully

$89.67 / hr funds the entered plan

The plan needs $107,602 in bills sent to clients. Dividing it by 1,200 paid client hours gives the lowest workable rate. This does not claim clients will pay that rate.

How to read this

62.5% of work time can be billed to clients

Each workweek has 25 paid client hours and 15 unpaid work hours. The plan includes 48 working weeks.

Check this carefully

$75.00 per hour leaves a $15,050 personal pay gap

$90,000 invoiced becomes $85,500 collected at the entered collection rate. After $8,550 stays in the business and $12,000 covers costs, $64,950 remains for personal pay before personal income tax.

How to read this

29.9 billable hours per week are needed at the current rate

That requirement is 4.9 hours above the entered billable plan.

How to read this

The lowest workable rate is not a client quote

The value to the client, competition, work included, risk, demand, taxes, benefits, payment timing, and local law can change a real price. StepShown only divides the yearly money needed by paid client hours.

Compare the main levers

Each row changes one planning assumption and keeps the others fixed.

What you are looking at: Required hourly rate, annual invoice target, and typical project floor under several planning assumptions. Each row changes one choice while the other entered numbers stay the same.

Required hourly rate, annual invoice target, and typical project floor under several planning assumptions
Choice	Rate floor	Annual invoice target	Typical project floor
Your planYour planAs entered	$89.67 / hr	$107,602	$3,587
Five more billable hoursTotal work hours unchanged	$74.72 / hr	$107,602	$2,989
Every invoice collectedAll else unchanged	$85.19 / hr	$102,222	$3,407
Two more weeks awayPaid client hours each week unchanged	$93.57 / hr	$107,602	$3,743

Main takeaway: the shaded row is your plan now. Read across another row to see what one change would do.

Test the current rate

$75.00 per hour across the entered paid client hours and expected paid invoices.

Annual amount invoiced: $90,000; 1,200 paid client hours
Annual amount collected: $85,500; 95% of invoices
Available for personal pay: $64,950; $15,050 below the pay target
Paid client hours needed each week: 29.9; 48 working weeks

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Checking which numbers are included in this page address…

“Copy result summary” includes the main answer and three important results. An answer can still reveal something about a number you removed from the link.

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How this tool was checked

Sources and review

Code and tests checked

StepShown checked the calculation code and its tests. The answer is still an estimate, not professional advice. Rules can also be different where you live.

Calculation version: Version 1.0
Last updated: Jul 29, 2026
Person responsible: StepShown engineering

Calculating the sales point that covers business costs
Published by U.S. Small Business Administration. Area covered: United States. StepShown owner: StepShown editorial. Checked Jul 29, 2026. Check again by Jan 25, 2027. The fixed cost divided by price less variable cost formula, monthly period consistency, whole sales units, and the distinction between fixed, variable, and mixed costs. Reference guidance; no date specific value is ingested.
Calculating startup costs
Published by U.S. Small Business Administration. Area covered: United States. StepShown owner: StepShown editorial. Checked Jul 29, 2026. Check again by Jan 25, 2027. Separating one time and monthly business expenses, estimating profit, and using cost calculations in a business plan. Reference guidance; no date specific value is ingested.
Manage your finances
Published by U.S. Small Business Administration. Area covered: United States. StepShown owner: StepShown editorial. Checked Jul 29, 2026. Check again by Jan 25, 2027. Tracking available cash, accounts receivable, accounts payable, payroll, and the timing difference between accrual and cash accounting. Reference guidance; no date specific value is ingested.

Read before deciding

How do I calculate a sustainable freelance hourly rate?

Read the StepShown calculation and writing rules, or report a problem.

Learn more

How the calculation works

The model builds the cash requirement before it divides anything by hours. Personal pay and annual business costs form the collected revenue need. The selected reserve increases that need, and the collection rate converts it into the amount that must be invoiced.

Collected revenue need: personal pay plus annual business costs
Invoice target: collected revenue need adjusted for the business reserve and collection rate
Annual billable hours: paid client hours per working week times 52 less weeks away
Lowest workable hourly rate: yearly amount to bill divided by yearly paid client hours

Paid client hours cannot exceed all work hours. Sales, administration, bookkeeping, communication, and learning can all consume work time without creating an invoice, so the calculator keeps all work time separate from time that creates client bills.

The result is the lowest rate that supports this yearly plan. It is not a common market rate or a pricing recommendation. It does not estimate taxes, benefits, demand, scope risk, client value, competition, invoice timing, discounts, or local worker classification. Personal pay is shown before personal income tax.

Common questions

What does personal annual pay mean here?

It is the amount you want available for personal pay after business costs and the selected business reserve, but before personal income tax. StepShown does not estimate federal, state, local, payroll, sales, value added, or other taxes.

What belongs in annual business costs?

Include software, equipment, insurance, professional services, licenses, marketing, payment fees not already reflected in collection, workspace, training, travel, subcontractors, and any other cost paid by the business. Keep personal household spending in the pay target instead.

Why separate total hours and billable hours?

Sales, proposals, administration, bookkeeping, learning, client communication, and time between projects can be real work without being invoiced. The rate has to recover the annual revenue target from the smaller billable pool.

What is the collection rate?

It is the percentage of billed money you expect clients to pay. Use 100% only when you expect every bill to be paid in full. For example, 90% means collecting 90 out of every 100 dollars billed. This is a planning test, not a claim that a client will refuse to pay.

What does the business reserve do?

It keeps the selected share of collected revenue inside the business before personal pay. That money can support working capital, equipment replacement, slow periods, or profit retained by the business. StepShown does not decide how it should be used.

Is the project floor a quote?

No. It multiplies the solved hourly floor by the entered project hours. A real fixed scope quote may also need discovery, revisions, risk, rush work, usage rights, materials, subcontractors, tax, or a value based price.

What is not modeled?

Taxes, employee benefits, retirement contributions, debt service, invoice timing, partial payments, currency conversion, market rates, demand, discounts, scope changes, utilization changes, legal classification, and the probability of winning enough work are outside this model.

Move from a personal service rate into offer economics, sales thresholds, and business cash timing.

Or browse everything in Business.

What rate makes freelance work sustainable?

Find the hourly rate floor

What are we finding?

What do these numbers mean?

How do we calculate it?

What does the answer mean?

$89.67 / hr funds the entered plan

62.5% of work time can be billed to clients

$75.00 per hour leaves a $15,050 personal pay gap

29.9 billable hours per week are needed at the current rate

The lowest workable rate is not a client quote

Sources and review

How the calculation works

Common questions

Where to go next

Find the hourly rate floor

What are we finding?

What do these numbers mean?

How do we calculate it?

What does the answer mean?

$89.67 / hr funds the entered plan

62.5% of work time can be billed to clients

$75.00 per hour leaves a $15,050 personal pay gap

29.9 billable hours per week are needed at the current rate

The lowest workable rate is not a client quote