How to calculate your hourly rate as a freelancer

Many freelancers set their hourly rate by gut feeling, or by copying a colleague. There is a better way: work backwards from the net income you want to the rate that supports it. That way you know you are not quietly working below minimum wage.

Step 1: start from your desired net income

What do you want to take home each month, including the holiday pay and bonuses you now have to arrange yourself? Say: 3,500 euros net per month, so 42,000 euros per year.

Step 2: add your costs and reservations

• Business costs: software, phone, travel, insurance, accounting, workspace. For many service providers 3,000 to 6,000 euros per year is realistic.
• Disability insurance (AOV): often 1,500 to 4,000 euros per year, depending on your profession and coverage.
• Pension: as an employee your employer chipped in; now it is your line item. Ten percent of revenue is a common starting point.
• Tax: you pay income tax and the Zvw healthcare contribution on your profit. Thanks to the self-employed deduction and the SME profit exemption the burden is lower than an employee's, but count on roughly a quarter to a third of your profit.

Step 3: be honest about billable hours

A year has 52 weeks, but after holidays, illness and public holidays about 46 working weeks remain. And not every working hour is billable: sales, administration, quotes and learning do not pay. Full-timers often land at 1,200 to 1,500 billable hours per year. Working four days? Count on 1,000 to 1,200.

Step 4: divide and round up

Rate = (desired net income + costs + reservations + tax) divided by billable hours. In the example: to net 42,000 euros, you quickly need 70,000 to 80,000 euros of revenue once costs and tax are included. At 1,300 billable hours that is an hourly rate of 55 to 62 euros excluding VAT. Round up; negotiating is easier from a higher starting point.

Do not skip the market check

Your calculated rate is your floor, not your asking price. Check what is customary in your field and region and what your experience is worth. If the market rate sits structurally below your floor, the rate is not the problem; your billable hours or costs are.

Run the numbers for your situation

With Finq's free net income calculator for freelancers you see instantly what an hourly rate yields net per month, including the self-employed deduction and SME profit exemption. Play with rate and hours until it matches what you want to keep.