Determine the hourly and daily billing rates you need to charge clients to cover business overhead, tax provisions, vacation weeks, and reach your net income goal.
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A designer wanting $3,500/mo take-home, $600/mo expenses, 22% tax, 25 billable hrs/wk, 4 weeks off.
The freelancer must bill at least $50.87 / hour (or ~$254.36 / 5-hour day) to meet all commitments.
As a freelancer, you have non-billable responsibilities: invoicing, pitching new clients, client meetings, professional development, and admin. Billing 25 hours usually requires 40 real hours of effort.
Subtract your planned time off from 52 weeks in the downtime input. If you take 4 weeks of vacation and 2 weeks for holidays or sick days, your annual revenue must be earned across 46 working weeks.
Financial advisors generally recommend setting aside 25% to 35% of all gross client payments into a dedicated tax and retirement account immediately upon invoice settlement.
Be sure to include recurring software licenses, laptop and phone hardware depreciation, workspace rent or co-working fees, professional indemnity insurance, and legal or accounting expenses.