What freelance rate do you need to replace your salary?
A $70,000 salary costs your employer about $91,000 with benefits. Replacing the whole package honestly needs roughly $110,000 of freelance revenue, or $84.62 an hour at 1,300 billable hours a year. The naive salary ÷ 2,080 answer ($33.65) understates the real rate by more than half.
Job-leaver mode · total-comp math · free, always
$70,000 salary, replaced honestly =
$84.62 / hour
$110,000 gross revenue ÷ 1,300 billable hours.
benefits + taxes + unpaid time · naive answer: $33.65
| Line | Amount |
|---|---|
| Naive: $70,000 ÷ 2,080 | $33.65/hr |
| 1.5× rule of thumb | $50.48/hr |
| 2× rule of thumb | $67.31/hr |
| Honest: $110,000 ÷ 1,300 | $84.62/hr |
Your salary, your replacement rate
Where the extra $40,000 comes from
The naive math divides salary by 2,080 and calls it a rate. Three corrections compound on top. First, total employer cost is 1.25–1.35× salary: payroll taxes, unemployment insurance, workers' comp, and the benefits below. Second, benefits you must now buy: solo health insurance ($8,400–$12,000 a year on the exchanges), the 401(k) match (4% of $70,000 = $2,800), and paid time off that becomes unpaid (5 weeks off at $50/hr is $10,000 of revenue that simply does not happen). Third, self-employment tax: 15.3% on your net earnings, the employer half your boss used to pay. The 1.5–2× rule of thumb ($50.48–$67.31) exists because experienced freelancers kept discovering this the expensive way; the full line-by-line math lands a bit above it at $84.62.
None of this means you need $84.62 on day one. It means $84.62 is the target the practice must reach to be a raise rather than a pay cut, and every client priced below the line is subsidized by your savings. Price the first clients to win the work, then climb the rate card client by client until the math above is what you quote.
Estimates, not business or tax advice. Benefit costs, tax rates, and billable hours vary. Talk to a tax professional before leaving a job.
Common questions
What freelance rate do I need to match my salary?
Roughly 1.5–2× your salary-implied hourly rate. For a $70,000 salary the full line-by-line math lands near $84.62/hr at 1,300 billable hours; the naive $33.65 understates it by more than half.
Why is the freelance equivalent so much higher than my salary?
Your employer pays 1.25–1.35× your salary in total cost, you lose paid benefits and PTO, and you owe the employer's half of payroll tax (15.3% self-employment tax).
How much is health insurance for a freelancer?
Typically $8,400–$12,000 a year for an individual on the exchanges, before subsidies. It is the single biggest line most job-leavers forget.
How many billable hours should I plan per year?
About 1,200–1,400: 25 billable hours a week for 48–52 weeks, minus unpaid time off and the unbilled half of every week.
Next from the ledger
How much should I charge per hour?: start from an income goal instead
Beginner freelancer rates: what to charge when you are starting out
Salary to hourly calculator: the PTO-adjusted value of your salary