What day rate pays you what you want?
Start from the income you want. See the rate that produces it once tax set aside and unbillable days are counted properly.
What you want to end up with personally, after your own tax.
Your estimate, not ours — see the note below. Zero leaves everything pre-tax.
Holiday plus anything else you take off. Nobody pays you for these.
Invoicing, chasing work, proposals, training. Worked, but not billable.
Insurance, accountant, software, equipment, workspace.
More options(3)
Budgeting zero is optimistic.
260 is every weekday.
To take home $70,000 a year
$523 / day
Setting aside 25% for tax, you need to earn $93,333 personally — not $87,500, which is what adding the rate on top would have told you. Add $6,000 of business costs and you must bill $99,333 across 190 billable days: $523 a day, or $65 an hour. The envelope version — target plus tax, over working days — says $337, about 36% short.
- Day rate needed
- $523
- Hourly
- $65
- Billable days
- 190 of 260
From what you want to what you bill
| Step | A year |
|---|---|
| Income you want | $70,000 |
| Tax you set aside25% of what you earn — not 25% added to what you keep. | $23,333 |
| Earnings you need | $93,333 |
| Business costsOut before anything reaches you. | $6,000 |
| Revenue you must bill | $99,333 |
| Divided by billable days260 working days, less 25 off, 5 ill and 40 unbillable. | 190 days |
| Day rate | $523 |
Two steps here are where the envelope version goes wrong. The set-aside is a share of what you earn, not a surcharge on what you keep — 25% held back means dividing by 0.75, not multiplying by 1.25. And the divisor is billable days, not working days. Either mistake alone understates the rate; together they understate it badly.
If you bill…
This is the number nobody can promise you
| Assumption | Day rate needed | Billable days |
|---|---|---|
| 63% of the year — cautious | $606 / day | 164 days |
| 73% of the year — middle | $523 / day | 190 days |
| 83% of the year — optimistic | $460 / day | 216 days |
Utilisation is the one genuine guess here, and the rate is very sensitive to it. Everything else on this page is arithmetic on figures you supplied, so it gets no range. A first year is usually nearer the cautious row than the optimistic one.
The set-aside rate is yours, not ours
This site will not guess a self-employed tax rate. What you owe depends on your jurisdiction and on whether you trade as a sole trader, a limited company or something else, and those differ enough that a plausible-looking average would be wrong for nearly everyone. So the percentage is a field you fill in, the way an assumed return is everywhere else here — and the table shows exactly what it does to the answer.
Leave it at zero and everything above is simply pre-tax. If you want the employee side modelled properly, with statutory bands and sources, the take-home pay calculator does that.
Coming at it from the job
If the number you are aiming at is really “what I earn now”, start from the job instead. A salary is not the whole package — the pension, the cover and the equipment go with it — so a rate that matches the salary still leaves you worse off.
Price your current package instead
Opens with the working days, costs and hours you set here.
The two mistakes that make a rate too low
Almost everyone sets a first rate the same way: take the income you want, add something for tax, divide by the days in a working year. Both of those steps are wrong, and they push the answer in the same direction.
Tax is a share of what you earn, not a surcharge on what you keep. If you set aside 25%, you do not need your target plus 25% — you need your target divided by 0.75, which is about 7% more than the shortcut says. The higher the rate, the wider the gap: set aside 40% and adding it on top leaves you roughly a sixth short of the income you asked for.
You bill fewer days than you work. Holiday, illness, invoicing, proposals, the work you pitch for and do not win — none of it is billable, and all of it is time. Divide by 260 and you have quietly assumed you sell every weekday of the year, which nobody does.
Put the two together and a rate that looked reasonable can be a third short of what the year actually requires.
Why the tax percentage is a field and not a figure
Every tax number on this site carries a source, a tax year and a verification date, because a wrong statutory figure is worse than no figure at all. There is no such sourced data here for self-employment — what you owe depends on your jurisdiction and on whether you trade as a sole trader, a limited company, or something else, and the differences are large.
So rather than print an average that would be wrong for most readers, the set-aside is yours to supply, exactly the way an assumed return is on every other page here. Ask your accountant, or use last year's actual bill as a share of what you earned. Set it to zero and the whole calculation is simply in pre-tax terms. If you want employee tax modelled properly, with statutory bands, the take-home pay calculator does that.
The rate is a floor, not a target
What this produces is the rate at which the year works out — nothing more. It contains no margin for a client who pays ninety days late, a quiet quarter, a project that overruns, or the pension you are now funding alone. A rate set exactly at the floor fails the first time anything goes wrong, and something always does.
It also says nothing about what the market will pay, which is a separate question with a separate answer. This tells you what you need. Whether you can get it is worth finding out before you rely on it.
Common questions
What tax percentage should I put in?
Why is dividing by 0.75 not the same as adding 25%?
How many days should I expect to bill?
Should business costs go in here or come out of the income?
Is this the same as the employee vs freelance calculator?
Not tax advice. The set-aside percentage is a figure you supply, not one this site sources or endorses. Self-employment tax, national insurance and company structures are not modelled here, and individual circumstances vary enormously.
Not advice. This tool applies arithmetic to assumptions you entered. It does not know your circumstances, your tax position or your goals, and it is not a recommendation to buy, sell or hold anything. Past returns do not predict future ones, and no figure here is a forecast.