$200/hour × 2,080 hours (a full-time employee year) is $416,000. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $200/hour is $250,000 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $158,572 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $200,000 | $170,000 | $24,020 | $126,392 |
| 1,250 h | $250,000 | $212,500 | $28,569 | $158,572 |
| 1,500 h | $300,000 | $255,000 | $29,707 | $192,117 |
| 1,800 h | $360,000 | $306,000 | $31,073 | $232,371 |
Per period at 1,250 billable hours
- Per month: $20,833 revenue
- Per week (48 working weeks): $5,208
- Day rate (8 hours): $1,600
Assumptions
Business costs 15% of revenue; self-employment tax 15.3% on 92.35% of profit (2026 Social Security wage base $184,500); the employee equivalent divides profit (less the employer-equivalent half of SE tax) by 1.25 to account for benefits an employer would provide — health cover, retirement match, paid leave. Income tax is similar in both cases and not included. Change any assumption in the hourly rate calculator or the take-home pay calculator.