What counts as unbillable time?

Any working hour you can't put on an invoice: proposals, sales calls, email, bookkeeping, marketing, networking, professional development, and administrative upkeep. Most full-time freelancers spend 25–50% of their working hours on it.

What's a good effective hourly rate?

There's no universal number, but a useful benchmark is your target salary equivalent: take the gross salary you'd accept in employment, add roughly 30% for benefits and employer taxes, and divide by your annual working hours. If your effective rate clears that bar, your business beats employment economically.

Should I include taxes as an expense here?

No — keep this pre-tax so it's comparable to a gross salary. Use our Tax Set-Aside Calculator to work out what portion of income to reserve for taxes separately.

Effective Hourly Rate Calculator — What You Actually Earn

Your invoice says one rate; your bank account tells a different story. This calculator divides what you actually kept by every hour you actually worked — admin, marketing, and proposals included — to reveal your true hourly earnings.

Why your real rate is lower than your billed rate

A freelancer billing $75/hour rarely earns $75/hour. Every billable hour drags invisible hours behind it: writing proposals, answering emails, bookkeeping, marketing, and the calls that never turn into work. Add software, equipment, and insurance, and it's common for the effective rate to land at half the billed rate or less.

That gap isn't a failure — it's the structure of independent work. The failure is not knowing the number. Your effective rate is what you should compare against a salaried offer, use to decide whether a client is worth keeping, and watch over time to see whether your business is actually getting healthier.

How to raise your effective rate

There are only three levers: raise prices, cut unbillable time, or cut expenses — and the first two dwarf the third. Raising your billed rate flows straight through to the effective rate, which is why a modest increase matters more than canceling a $15 subscription. On the unbillable side, the biggest wins are usually templated proposals, a standard contract, and ruthless qualification of leads before you invest hours in them.

Track the number quarterly rather than per-project. Single projects swing wildly — one nightmare client can halve a month — but the quarterly trend tells you whether your pricing and processes are working.

Frequently asked questions

What counts as unbillable time?: Any working hour you can't put on an invoice: proposals, sales calls, email, bookkeeping, marketing, networking, professional development, and administrative upkeep. Most full-time freelancers spend 25–50% of their working hours on it.
What's a good effective hourly rate?: There's no universal number, but a useful benchmark is your target salary equivalent: take the gross salary you'd accept in employment, add roughly 30% for benefits and employer taxes, and divide by your annual working hours. If your effective rate clears that bar, your business beats employment economically.
Should I include taxes as an expense here?: No — keep this pre-tax so it's comparable to a gross salary. Use our Tax Set-Aside Calculator to work out what portion of income to reserve for taxes separately.