Working backwards from a target
Most rate-setting goes the wrong way round: pick a plausible-sounding number, then discover at year end what it added up to. Starting from the income you need and dividing by the hours you will actually work produces a rate you can defend and a target you can measure against.
The weeks that are not there
| Weeks worked | Hours at 40/week | Rate for a 1.8M target | | --- | --- | --- | | 52 | 2,080 | 865 | | 46 | 1,840 | 978 | | 42 | 1,680 | 1,071 |
Six weeks off raises the necessary rate by 13%. Ignoring them does not create extra time; it creates a shortfall you find out about in December.
For employees too
The same calculation converts a salary into an hourly figure worth comparing against contract offers, and makes the cost of unpaid overtime concrete. An extra unpaid hour a day is a 12% pay cut, whatever the salary line says.
Questions
Why set working weeks below 52?+
Because you will not work all of them. Holiday, public holidays and sick days remove four to eight weeks for most people. Dividing by 52 produces a rate that only works if you never take a day off — which is how a rate ends up quietly too low.
Is this the same as the freelance rate calculator?+
No. This divides a target across the hours you work. The [freelance rate calculator](/t/freelance-rate-calculator) also accounts for business expenses and for the hours that are worked but not billable, which is the larger correction.
Should I use gross or net as the target?+
Gross if the number is a salary equivalent, net if it is what you want to keep. Being clear which one you entered matters more than which you chose — the two differ by your entire tax rate.
What about a day rate?+
The daily figure assumes your weekly hours spread over five days. If you work four longer days, the day rate is higher and the hourly rate unchanged.