Determine the hourly rate you should charge to make a profit as a freelancer and how many billable hours you should be including in your invoices.
This freelance calculator allows you to calculate the minimum rate you should charge in order to cover your business expenses and get an additional revenue. It relies upon the idea that what you charge should equal the sum of the salary you would obtain in a comparable job plus the expenses arising from your business and an eventual revenue. The rough incidence of income tax is also taken into account in the calculation of your fee.
How to calculate your hourly rate
Another type of expense to consider would be the amortization, that is, the loss of value experienced by your assets over time due to deterioration or obsolescence, etc.
For example, if you buy a phone for € 250 and you expect to replace it in 4 years time you will have to amortize its cost at 25% per year, meaning an expense of 25% * € 250 = € 62.5 per year.
You also have to take into account the cost of your work itself, your salary. You should include what you can call an equivalent salary: a salary similar to what you would charge if you performed our activity as an employee. Notice that the fact of not having a payroll does not mean there is no expense behind. To see it more clearly, you just have to think that if you did not do the work yourself you would have to hire someone.
Finally, personal tax should also be considered, since the income derived from an economic activity is taxed annually by said tax. As it is a progressive tax, the marginal rate should be used as a tax rate, that is, the rate at which the last earned income is taxed.
c. Billable hours
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Not your language, please have a look at the spanish version of this freelance calculator.
Do you need to issue an invoice adapted to the Spanish Law, try our free online invoice generator.