How do I work out my freelance day rate?

Work backwards from what you need in your pocket. Take your target take-home for the year, gross it up for the tax and contributions you will owe on it, add your annual business costs, then divide by the days you can actually bill rather than the days you work. Around 145 billable days a year is realistic once holiday, public holidays, sick days and unpaid work such as proposals, invoicing and chasing are removed. The result is usually close to double what you get by dividing an old salary by working days.

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What your rate has to cover that a salary covered for you

Short answer

Almost everyone starts by dividing their old monthly salary by working days. That number is roughly half of what it needs to be, because the salary was the smallest part of what employing you cost and the rest was invisible. Work backwards instead: what you need in your pocket, grossed up for tax, plus your business costs, divided by the days you can actually bill.

The number people start with

You earned 3,000 a month. There are about 21 working days in a month. So the day rate is around 143, and 150 sounds like a reasonable ask.

Everything about that calculation is arithmetically correct and it will not survive the year. It compares a gross salary with a business turnover, and those two numbers have almost nothing in common except that they are both money.

What the salary was quietly paying for

Your gross salary was never what you cost. It was the part of your cost that appeared on your payslip. Around it sat several other payments, all of them now yours.

The employer's share of contributions - paid on top of your gross salary, never shown to you, and in most of Europe a substantial percentage of it. Working for yourself, you carry both halves.
Paid holiday - four or five weeks where the money arrived and no work was done. Nobody funds that now except the rate.
Public holidays - another week or two, paid, on top of the holiday.
Sick days - an employee who is ill is still paid. A freelancer who is ill is a freelancer not invoicing.
Everything that was not the job - meetings, training, admin, the hour lost to a system outage. All of it was on the clock, and all of it was paid.
The tools - laptop, software licences, phone, desk, insurance, and somebody else's problem when they broke.

None of that disappeared when you went independent. It moved onto your invoice, whether or not you put it there.

Working days are not billable days

This is the half of the calculation people skip entirely, and it is the half that does the most damage.

261 working days - fifty-two weeks, five days each. The theoretical year.
Minus about 25 holiday days - unless you intend to work every week of your life, in which case this guide is not your main problem.
Minus about 10 public holidays - most clients are closed anyway.
Minus a few sick days - five is optimistic, not pessimistic.
Around 220 days remain - and this is where most people stop counting, which is the mistake.
Of those, roughly two thirds are billable - the rest go to proposals nobody accepted, invoicing, chasing payment, bookkeeping, learning, and the empty week between two projects.

That leaves about 145 billable days in a year. Not 261. The whole year of costs, taxes and living has to come out of those 145, and pricing as though there were 261 is how a busy year ends with nothing in the account.

The arithmetic, worked

Same person as above. The 3,000 monthly salary left about 2,200 in their pocket after their own tax, so the target is to end up no worse off:

Target take-home: 26,400 a year - 2,200 a month, the money that actually reached them.
Gross it up for tax and contributions - assume 30% combined for the illustration, so 26,400 divided by 0.70 is about 37,700 of profit needed before tax.
Add annual business costs: 6,000 - software, laptop, phone, insurance, accountant, workspace. Modest, and easy to exceed.
Revenue needed: about 43,700 - this is what has to be invoiced and collected, not merely invoiced.
Divide by 145 billable days - which gives roughly 300 a day.

Around 300, against the 150 they were about to quote. Not a margin of error, a factor of two, and the person quoting 150 will work a full year and finish it wondering where the money went.

The 30% is illustrative and it is the number to replace first, because it moves enormously between countries. Income tax alone is a flat 10% in Bulgaria and North Macedonia and reaches top rates above 50% in Austria, Belgium and Denmark, and contributions sit on top of it and are frequently the larger part. Thirty percent may be generous where you are or nowhere near enough, and there is no way to know which without asking. Which taxes reach you is the place to start, and how much to set aside is how you hold it once it arrives.

What the number still does not include

A pension - beyond whatever your mandatory contributions buy, which in most countries is not a retirement.
Invoices that never get paid - some percentage of what you bill will not arrive. It is a cost of trading, not an accident.
The quiet quarter - work is not distributed evenly, and the year has to survive its worst three months, not its average.
Growth - equipment, a course, a tool, anything that makes next year better than this one.
Anything left over - the point of running a business rather than being employed is that there is supposed to be something above the salary you replaced.

Which is why 300 in that example is the floor and not the target. It is the rate at which you have exactly replaced a job, with none of a job’s protection and all of its obligations.

Then check it against what actually arrives

One last correction, and it is the one this whole site is about. The rate assumes the money arrives. Some of it arrives late, some arrives smaller than invoiced, and a little never arrives at all.

A rate that works on paper and a year that works in the account are different achievements, and the distance between them is measurable: cash flow, liquidity and runway is where that gap gets counted, and what you are owed when an invoice is late is what to do when it opens.

Common questions

Why is my freelance rate not just my old salary divided by working days?

Because the salary was the smallest part of what employing you cost, and the rest was invisible to you. Your employer paid contributions on top of your gross pay, funded your paid holiday and public holidays, carried you when you were ill, and paid you for every day you spent in meetings rather than producing. As a freelancer you pay all of that yourself, out of the rate, on the days you actually bill. That is why the honest figure is usually around double the naive one.

How many days a year can I actually bill?

Fewer than you think. Start from about 261 working days, take off holiday, public holidays and a few sick days, and roughly 220 remain. Of those, a share goes to work nobody pays for: proposals, invoicing, chasing payments, admin, learning, and the gaps between projects. Around two thirds billable is a realistic planning figure for most independent workers, which lands near 145 billable days in a year.

Should I quote a day rate or a project price?

The arithmetic on this page gives you a day rate, and that day rate is what you use to price a project: estimate the days honestly, add the ones you always forget, and multiply. Quoting projects protects you from being paid by the hour for getting faster, but it only works if you know your own daily number underneath it. Nobody can price a project safely without it.

What if the market will not pay the number I calculated?

Then the number has told you something useful rather than something discouraging. Either the work has to change, the costs have to come down, the billable share has to rise, or the plan does not close at this scope. All four are decisions. Quoting a rate you already know does not cover you is not a fifth option, it is the same decision taken slowly and with worse information.

Does raising my rate mean earning proportionally more?

More than proportionally, because your business costs and unbillable days do not rise with the rate. Once the fixed part of the year is covered, a large share of every additional unit goes to your side. That also runs in reverse: a discount does not come off the top of your income, it comes off the part that was left after everything else was paid.

Should I include equipment and software in the rate?

Yes, as annual business costs divided across billable days, which is what the worked example does. Anything you buy to do the work belongs in the number: laptop, software, insurance, accountant, phone, workspace. Leaving them out does not make them disappear, it just means they come out of what you thought was your income.

Built for this

A rate is a plan. Billingz shows what happened to it: what you invoiced against what actually arrived, how fast each client really pays, and what is left once the tax set-aside is out, so next year’s number is built on your own history rather than on the same assumptions again.

See how Billingz works

This guide is general information, not tax, accounting or business advice. Every percentage used above is illustrative and chosen to show the arithmetic: tax rates, contribution rates, holiday entitlements and realistic billable ratios differ by country, by legal form and by profession. Billingz does not set prices, calculate tax, or warrant that these figures fit your situation. Replace every assumption with your own before relying on the result, and take local advice on the tax and contribution part.