How We Calculate Your Rate

Most people calculate their rate wrong. They take what they want to make, divide by some number of days, and call it done. That ignores a third of the real cost of being self-employed.

The correct formula starts with your take-home goal and works forward — adding every cost you absorb as a freelancer that a salaried employee never sees on their pay stub.

Each of those inputs is explained below with its source. None of them are arbitrary.

When you work for an employer, they pay half of your Social Security and Medicare taxes. As a freelancer, you pay both halves — the employer side and the employee side.

This is not an estimate or a conservative assumption. It is the statutory rate in IRS Publication 334 and Schedule SE. A W-2 employee making the same gross income pays roughly half this amount — their employer absorbs the other half invisibly.

Source: IRS Publication 334 (Tax Guide for Small Business); IRS Schedule SE; Social Security Administration wage base 2024

Salaried employees typically receive employer-subsidized health coverage. Freelancers buy their own. The $7,400 figure represents the average annual premium for an individual ACA marketplace plan in 2026, before subsidies.

Subsidies exist on a sliding income scale and are not accounted for here because they phase out as income rises and vary significantly by state, plan selection, and age. This figure represents the unsubsidized baseline — what you need to budget before any assistance.

If you currently have coverage through a spouse, union, or other means, you may exclude this from your calculation. For everyone else, it is a real line item.

Source: KFF Health Insurance Marketplace Calculator (2026); U.S. Department of Health & Human Services ACA premium data

A rate that exactly covers your expenses leaves no margin for error. Equipment fails. Projects fall through. Clients go silent. The 20% profit buffer is included as an optional line item — you can toggle it off in the calculator — but it represents the difference between a sustainable business and one that collapses when anything goes wrong.

Industry guidance from freelance business resources and the Freelancers Union commonly recommends 15–25% net profit targets for creative service businesses. We use 20% as a middle-ground default.

Source: Freelancers Union; SCORE (U.S. Small Business Administration); standard small business financial planning guidance

A full-time salaried employee works roughly 260 days a year. A freelancer does not bill 260 days. The difference is absorbed by unpaid gaps between projects, time spent on business development, invoicing, admin, equipment maintenance, and the weeks between gigs that nobody tells you about before you go independent.

150 days is not pessimistic. It is the number consistently cited in freelance surveys across creative disciplines. Experienced freelancers with full client rosters may bill 170–180 days. Newer freelancers may bill fewer. 150 is a responsible baseline.

You can adjust this in the calculator. Increasing it lowers your required day rate; decreasing it raises it. The math is transparent.

Source: Freelancers Union Annual Freelancing in America Report; AND CO Freelancer Income Report; industry common practice

The calculator compares your computed rate against market floors — the minimum a working professional at each level typically commands in a mid-market environment. These are not aspirational targets. They are the low end of what the market has demonstrated it will pay.

These figures are drawn from 2024–2025 data across production rate cards, union minimums, freelance platform surveys, and direct industry reporting. They represent what clients actually pay when they hire experienced professionals — not what they offer when lowballing.

All figures are base day rates in USD for a mid-market (standard U.S. city) environment. A location multiplier is applied for major markets (×1.3) and small markets (×0.85).

Source: IATSE Local rate cards; Production Hub freelance rate surveys 2024–2025; Mandy.com industry salary data; direct market research across U.S. production markets

The same day of work commands different rates in New York than in Tulsa — not because the work is different, but because the clients, budgets, and cost of living are different. Location multipliers adjust the rate floor to reflect what the local market will bear.

These multipliers are conservative. Major-market productions frequently pay significantly above these floors — particularly for senior and expert-level crew on commercial and streaming work. The floor is a floor, not a ceiling.

The reality check section of the calculator anchors your take-home goal to its 2019 purchasing power equivalent. This is not rhetorical — it is a factual adjustment for what a dollar is worth.

If you were earning $80,000 in 2019, you need approximately $101,600today to have the same purchasing power. A rate that hasn't kept pace with inflation isn't the same rate — it's a pay cut.

This is why freelancers who haven't raised their rates in five or more years are effectively earning less than they were. The numbers didn't stay the same. The cost of everything else moved.

Source: U.S. Bureau of Labor Statistics CPI-U (All Urban Consumers, All Items), January 2019 through January 2026