Your day rate is a utilisation problem: a worked example

Take two freelancers who want the same 60,000 a year after tax. One bills 60 % of their working hours, the other 45 %. The first can charge 77.90 an hour; the second needs 103.86 for the same life: a rate 33 % higher, with the same skills and the same goal.

The formula in four lines

1. Revenue needed = income goal ÷ (1 − tax set-aside) + business costs → 60,000 ÷ 0.75 + 6,000 = 86,000.
2. Working weeks = 52 − weeks off → 46 (six weeks off assumed).
3. Billable hours = working weeks × hours per week × billable share → 46 × 40 × 0.60 = 1,104.
4. Hourly rate = revenue needed ÷ billable hours → 77.90. Day rate = revenue needed ÷ billable days (46 × 5 × 0.60 = 138) → 623.19.

What to do with it

• Quote day rates for project work: clients compare days, not hours, and you stop selling admin time for free.
• Track unbilled time for one month. If your billable share turns out under 50 %, fixing that beats any rate increase.
• Re-run it when costs, taxes or holidays change, not only when you feel underpaid.

Run your own numbers, free and without sign-up: freelance hourly rate calculator.

Disclosure: I built the calculator linked above and make Clientsroster, a Notion client hub for freelancers.