Salary to Freelance Income Equivalent Calculator

Understanding the salary to freelance income equivalent — concept and principle

When you leave a salaried job to freelance, your salary is a poor guide to what you need to bill: an employer also pays for benefits, paid leave, tools and office space. This calculator estimates the yearly freelance revenue that would replace a given salary package, and turns it into a minimum hourly rate based on how much of your time you can actually bill. It works with any currency.

How it is calculated

1. Revenue needed = salary × (1 + benefits % ÷ 100) + business costs.
2. Billable hours = 1,880 × billable share ÷ 100.
3. Hourly rate = revenue needed ÷ billable hours.

Benefits % is the value of employer-paid extras as a share of gross salary. Business costs are your own yearly software, equipment, accounting and insurance. Billable share is the part of your working time clients actually pay for.

The principle

The goal is like-for-like replacement. An employee's real compensation is salary plus benefits, and the employer silently absorbs the cost of tools. A freelancer has to fund all of that from revenue, so the two are added together. The 1,880 hours is a standard full-time year: 52 weeks × 40 hours = 2,080, minus about 200 hours (roughly 25 days) of holidays and leave. Not all of those hours are paid work. Sales, admin, invoicing and gaps between projects are unpaid, so the hours are scaled by the billable share.

Worked example

1. Salary $65,000 with benefits of 25%: 65,000 × 1.25 = $81,250.
2. Add business costs of $8,000: revenue needed = $89,250.00.
3. Billable hours: 1,880 × 0.65 = 1,222 hours a year.
4. Hourly rate: 89,250 ÷ 1,222 = $73.04.

How to read the result

The hourly figure is a floor, not a target price: it only matches your old package, with no reward for the extra risk of irregular income. If it looks far above market rates, check the billable share: moving from 50% to 70% cuts the required rate by almost 30%.

Common mistakes

• Assuming every working hour is billable (100% share) and underpricing as a result.
• Leaving out paid leave, sick days and public holidays from the benefits value.
• Forgetting that taxes and social contributions may be handled differently once you are self-employed.

FAQ

Frequently asked questions

What percentage should I use for benefits?

It depends on the country and employer. In the US, the Bureau of Labor Statistics reports that benefits make up roughly 30% of total compensation for civilian workers, which is a bit over 40% of wages. Use your own payslip and benefit statements if you can.

What is a realistic billable share?

Many solo freelancers bill roughly half to three quarters of their working time; newcomers are usually at the lower end.

Why 1,880 hours and not 2,080?

2,080 assumes you work every weekday of the year. Subtracting holidays and leave gives a more honest full-time year of about 1,880 hours.

Sources: U.S. Bureau of Labor Statistics — Employer Costs for Employee Compensation (ECEC) · IRS — Self-Employed Individuals Tax Center