The formula, in one paragraph
How to calculate your day rate comes down to four numbers. Start with the take-home income you want, add your overhead, gross the result up for tax, and divide by the days you actually bill. The example is a $100,000 take-home target, 15% overhead, a 25% tax buffer, and 220 billable days: an annual gross of $153,333.33, a day rate of $696.97, an hourly rate of $87.12, a weekly rate of $3,484.85, and a monthly gross of $12,777.78.
Step 1: Pick your target take-home income
Start with the amount you want to keep, not the amount you want to bill. The target is your take-home income for the year — what lands in your bank account after tax and business costs. The example target is $100,000. If you want $75,000 instead, the gross is $115,000.00 and the day rate is $522.73. If you want $150,000, the gross is $230,000.00 and the day rate is $1,045.45.
Step 2: Add the overhead
Overhead is what the business costs to run, as a percentage of your take-home: software, equipment, insurance, and unpaid admin time. The default is 15%. The gross-up is income × (1 + overhead): $100,000 × 1.15 = $115,000 before tax. With no overhead at all, the day rate would be $606.06 after the tax step. With 30% overhead, the day rate is $787.88. Count your real costs and use that percentage.
Step 3: Gross up for tax
Freelancers pay their own tax, so the buffer has to be built into the rate — divide by (1 − tax) to gross it up. The default tax buffer is 25%: $115,000 / 0.75 = $153,333.33 a year gross. With a 20% buffer, the gross is $143,750.00 and the day rate is $653.41. With a 30% buffer, the gross is $164,285.71 and the day rate is $746.75. Five points of tax add almost $50 a day, so use your real rate. The tax buffer for a $750 a day rate is 30.30% (exact 30.3030%): at 30.30% the day rate is $749.97.
Step 4: Divide by your billable days
Billable days are the days you actually charge a client for, not the days in the year. A year has about 260 weekdays; holidays, sick days, and unpaid admin leave most freelancers with around 220. The day rate is the annual gross divided by the billable days: $153,333.33 / 220 = $696.97. At 180 billable days the same $100,000 target needs $851.85 a day, and at 250 days it needs $613.33 a day. The gross does not change when the days change — only the rate does. Do not count days you do not bill: a day spent finding clients or invoicing is a day the rate has to cover.
Step 5: Hourly, weekly, and monthly
The hourly rate is the day rate divided by the hours in a day: $696.97 / 8 = $87.12 an hour. At 6 hours a day it is $116.16; at 10 hours it is $69.70 — the day rate does not change, only the hourly rate does. The weekly rate is the day rate times five: $696.97 × 5 = $3,484.85. The monthly gross is the annual gross divided by 12: $153,333.33 / 12 = $12,777.78. Monthly figures are rounded to the cent, so monthly × 12 can differ from the annual gross by a few cents.
Step 6: Working backwards — the five reverses
Sometimes the question runs the other way: the rate is fixed, and you want to know what it buys. The day rate for an $80,000 target is $557.58 (exact 557.5758): at $557.58 the take-home is $80,000.61 ($0.61 over), at $557.57 it is $79,999.17 ($0.83 under). The billable days for a $120,000 target at $800 a day are 230 (exact): at 230 days the take-home is $120,000.00 exactly, at 229 days $119,478.26. The overhead for a $650 a day rate is 7.25% (exact): at 7.25% the day rate is $650.00 exactly — and at 0% overhead it is still $606.06, so $600 a day cannot fund a $100,000 take-home. The tax buffer for a $750 a day rate is 30.30% (exact 30.3030%): at 30.30% the day rate is $749.97. At $900 a day, 200 days, 20% overhead and 30% tax, the take-home is $105,000.00 on a gross of $180,000.00.
What changes the answer
Four things move the answer. The target moves it the most: $75,000 needs $522.73 a day, $150,000 needs $1,045.45. The billable days move it next: 180 days needs $851.85, 250 days $613.33. The tax moves it almost as much: a 20% buffer needs $653.41, a 30% buffer $746.75. The hours per day do not move the day rate at all: 6 hours gives $116.16 an hour, 10 hours $69.70, and the day rate stays $696.97.
What NOT to do
Do not divide your target by your billable days and stop there: $100,000 / 220 = $454.55, and it leaves you $242.42 a day short, because it forgets the overhead and the tax. Do not count every weekday as billable: 260 weekdays is not 260 billable days. Do not use a tax buffer you have not checked: five points of tax is almost $50 a day. Do not quote the hourly rate when the client asked for a day rate: the day rate is $696.97 either way.
That box is the whole formula.
Worked example: $100,000 take-home, 220 billable days, 15% overhead, 25% tax, 8 hours a day
Step 2: day rate $153,333.33 / 220 = $696.97.
Step 3: hourly rate $696.97 / 8 = $87.12.
Step 4: weekly rate $696.97 × 5 = $3,484.85.
Step 5: monthly gross $153,333.33 / 12 = $12,777.78.
Answer: your day rate is $696.97 — $87.12 an hour, $3,484.85 a week, $12,777.78 a month, $153,333.33 a year.
Rounding convention: totals are computed from unrounded values, so rounded parts may differ by a cent from their rounded sum.
Bright Side Kit. "How to Calculate Your Day Rate: A Step-by-Step Guide" https://brightoolbox.com/guides/how-to-calculate-your-day-rate/ Accessed October 25, 2026.