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Freelance Project Profitability Calculator

Determine your true net profit and effective hourly rate

Financial Breakdown

Net Profit (Post-Tax):

Effective Hourly Rate:

Profit Margin:

Tax Liability:

How to Use the Freelance Profitability Calculator

As a freelancer, your "gross" income is never your "net" income. This calculator helps you look past the headline figure of a contract to see how much you actually take home after expenses and taxes, and most importantly, what your time is actually worth.

Key Metrics Explained

• Total Project Fee: The total amount the client is paying you for the deliverable.
• Direct Expenses: Any costs incurred specifically for this project, such as subcontractor fees, premium stock photos, specialized software subscriptions, or hardware.
• Tax Rate: This varies by region, but a safe estimate for self-employed professionals is usually 20% to 35% of net income.
• Effective Hourly Rate: This is your net profit divided by the total hours worked. If this is lower than your target rate, you may be undercharging or over-delivering.

Example Scenario

Imagine you land a web design project for $4,000. You estimate it will take 50 hours of work. You need to spend $300 on premium plugins and a template, and your self-employment tax rate is 25%.

The Calculation:
1. Gross Profit: $4,000 – $300 (Expenses) = $3,700
2. Tax: $3,700 * 25% = $925
3. Net Profit: $3,700 – $925 = $2,775
4. Effective Hourly Rate: $2,775 / 50 hours = $55.50/hour

3 Strategies to Increase Your Margin

1. Value-Based Pricing: Instead of charging by the hour, charge based on the ROI the project provides to the client. This decouples your income from your time.
2. Productization: Create templates or workflows for repetitive tasks to reduce the "Estimated Total Hours" while keeping the "Project Fee" high.
3. Expense Management: Periodically review your software stack. Recurring $30/month subscriptions can quickly erode the profitability of smaller projects.

function calculateFreelanceProfit() { var fee = parseFloat(document.getElementById('projectFee').value); var hours = parseFloat(document.getElementById('projectHours').value); var expenses = parseFloat(document.getElementById('projectExpenses').value) || 0; var taxRate = parseFloat(document.getElementById('taxRate').value) || 0; if (isNaN(fee) || isNaN(hours) || fee <= 0 || hours <= 0) { alert("Please enter valid positive numbers for Project Fee and Hours."); return; } var grossProfit = fee – expenses; var taxAmount = grossProfit * (taxRate / 100); var netProfit = grossProfit – taxAmount; var hourlyRate = netProfit / hours; var margin = (netProfit / fee) * 100; document.getElementById('resNetProfit').innerText = "$" + netProfit.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resHourly').innerText = "$" + hourlyRate.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + " / hr"; document.getElementById('resMargin').innerText = margin.toFixed(1) + "%"; document.getElementById('resTax').innerText = "$" + taxAmount.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resultsArea').style.display = 'block'; }