The most common freelancer miscalculation is anchoring your rate to your old employee salary. If you earned €30 an hour as an employee, you charge €35 — and wonder why nothing is left at year end. The reason: as a freelancer you carry taxes, social contributions, overhead and every unpaid day yourself. Our freelance hourly rate calculator works backwards — from your target net income to the required day and hourly rate.
Why Your Rate Must Be So Much Higher
An employee taking home €4,000 net per month costs the employer a multiple of that: payroll tax, social security, paid vacation, sick days, public holidays, workspace, training. As a freelancer you cover all of it yourself — but only on the days you can actually bill.
The Formula: Reverse Calculation in Five Steps
- Required profit before tax = Target net / (1 − contribution rate)
- Required annual revenue = Profit before tax + annual business costs
- Billable days = (365 − 104 weekends − vacation − holidays − sick − training) × (1 − non-billable share)
- Day rate = Annual revenue / billable days
- Hourly rate = Day rate / hours per billable day
Worked Example: €3,000 Net per Month
A freelancer wants €3,000 net per month — €36,000 per year. She estimates a flat 40% contribution rate on profit and has €22,800 of annual business costs (software, hardware, insurance, tax advisor, office).
- Profit before tax = €36,000 / (1 − 0.40) = €60,000
- Annual revenue = €60,000 + €22,800 = €82,800
- Billable days = (365 − 104 − 30 vacation − 11 holidays − 8 sick − 5 training) × (1 − 0.20) = 207 × 0.8 = 165.6 days
- Day rate = €82,800 / 165.6 = €500
- Hourly rate (8 h/day) = €500 / 8 = €62.50
A €3,000 net target turns into a required hourly rate of €62.50 — more than double the naive gut figure.
The Biggest Lever: Billable Days
Of 365 days, only about 207 working days remain after weekends, vacation, holidays, sickness and training. Sales, proposals and admin eat into those — the non-billable share. At 20% only 165.6 billable days are left. Every extra unpaid day pushes your required rate up.
VAT: The Most Common Mistake
VAT (19% in Germany) is paid by your client on top of your fee. It is a pass-through item you forward to the tax office — it is not part of your net hourly rate. Charging €62.50 net means invoicing €74.38 gross. Never confuse the two. See the VAT calculator for details.
Honest Note: Not Tax Advice
The 40% contribution rate is a rough flat estimate. Actual income tax is progressive (§32a EStG German Income Tax Act) and rises with profit. Health and care insurance depend on your status (voluntary statutory vs. private). Plan your income tax and, where applicable, trade tax separately — and consult a tax advisor when in doubt.
A Costing Basis, Not a Market Price
The calculated rate tells you what you need — not what you can charge. The achievable rate depends on market, specialization, demand and negotiation. If your costing rate sits above market level, adjust the levers: more billable days, lower overhead or a higher skill level.
Calculate Now
Use the freelance hourly rate calculator to find your individual day and hourly rate. For tax planning, the income tax calculator and VAT calculator help.