$250/hour × 2,080 hours (a full-time employee year) is $520,000. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $250/hour is $312,500 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $200,503 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $250,000 | $212,500 | $28,569 | $158,572 |
| 1,250 h | $312,500 | $265,625 | $29,992 | $200,503 |
| 1,500 h | $375,000 | $318,750 | $31,415 | $242,434 |
| 1,800 h | $450,000 | $382,500 | $33,122 | $292,751 |
Per period at 1,250 billable hours
- Per month: $26,042 revenue
- Per week (48 working weeks): $6,510
- Day rate (8 hours): $2,000
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.