Going freelance
What Hourly Rate Replaces a $95K Salary?
$95,000 divided by 2,080 hours is $45.67. Charge that as a freelancer and you will take a substantial pay cut, because you have just priced 2,080 billable hours you will never have and forgotten every cost your employer was paying on your behalf.
The short answer
About $84 an hour. Two adjustments do the work: you have roughly 1,410 billable hours a year rather than 2,080, and you now pay the employer half of payroll tax plus your own health cover and retirement. Together they turn $45.67 into $84 — an 84% uplift on the naive number.
Step 1 — the hours you can actually bill
| Hours | |
|---|---|
| Full year at 40 hours a week | 2,080 |
| Less 15 days of leave | −120 |
| Less 10 public holidays | −80 |
| Available | 1,880 |
| Less 25% for sales, admin, invoicing, bookkeeping | −470 |
| Billable | 1,410 |
The 25% is the figure most first-year freelancers underestimate. Finding work, quoting, chasing invoices and doing your own books is real time and nobody pays for it. If you are new, assume worse than 25%.
Step 2 — the costs your employer was absorbing
| Cost | Annual |
|---|---|
| Target take-home equivalent | $95,000 |
| Health cover | $9,600 |
| Retirement contribution you were being matched on (4%) | $3,800 |
| Professional liability insurance | $1,200 |
| Subtotal | $109,600 |
| Grossed up for the employer half of payroll tax (7.65%) | $118,679 |
| Divided by 1,410 billable hours | $84/hour |
The payroll-tax gross-up is the one people miss entirely. As an employee, your employer paid 7.65% of your wages in FICA alongside your own 7.65%. Self-employed, you pay both halves — so the revenue has to be grossed up, not just increased by 7.65%.
What different rates actually mean
| Rate | Revenue at 1,410 hours | Verdict |
|---|---|---|
| $45/hour | $63,450 | A large pay cut |
| $65/hour | $91,650 | Still below the employed package |
| $84/hour | $118,440 | Roughly break-even |
| $100/hour | $141,000 | A genuine raise, and a buffer for slow quarters |
Break-even is the floor, not the goal. A freelancer carries risk an employee does not — no notice period, no sick pay, no guaranteed pipeline — and that risk should be priced in above break-even, not absorbed.
What this assumes
- A $95,000 salary you are replacing, before tax.
- 15 days of leave and 10 public holidays taken.
- 25% of available time spent on non-billable work.
- $9,600 a year for health cover, $1,200 for liability insurance — both vary enormously by age, state and trade.
- A 4% employer retirement contribution being replaced.
- Self-employment tax at 15.3% on net earnings, of which 7.65% is the half your employer used to pay.
Every one of these is an input, not a fact about your situation. Change them in the calculators below and the answer changes with them.
Run the math yourself
These calculators give you the same numbers we used above — with your own inputs.
Bottom line
Work out your own billable hours before your rate — the hours number moves the answer more than any cost line. Add every benefit you are giving up, gross the total up for the employer half of payroll tax, then divide. Whatever comes out is your floor. Quote above it.
Disclaimer. This is educational, not personalized financial advice. Numbers depend on your specific tax bracket, state, and goals. Verify with the IRS, SSA, or a CPA before acting. See our Financial Disclaimer.
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