How this calculation works
A freelancer does not usually invoice every working hour. Start with the annual personal income you want, allow for business expenses and your own reserve, then spread the required billings across hours you realistically expect clients to pay for. Percentage fees are grossed up rather than simply added: a 20% fee leaves only 80% of the quoted price. The project estimate adds scope time and separately recovered direct costs, while keeping GST and statutory tax calculations outside this planning model.
Worked example
This example uses illustrative inputs. Your current result is shown above.
A ₹9,00,000 annual income target, ₹2,00,000 expenses, 10% profit reserve and 20% billing fees need (₹2,00,000 + ₹9,00,000 ÷ 0.9) ÷ 0.8 = ₹15,00,000 billings. With 50 weeks × 5 days × 8 hours, no extra unpaid days and 50% billable time, there are 1,000 billable hours: ₹1,500/hour or ₹12,000 per fully billable day. A 10-hour project with 20% extra scope time and ₹800 direct costs is 12 × ₹1,500 + ₹800 ÷ 0.8 = ₹19,000 before any GST or sales tax.
Assumptions and limits
- All weeks, days and unpaid days refer to one planning year. Holidays excluded from working weeks must not also appear as additional unpaid days.
- The entered billable share includes expected non-billable sales and administration. Only billable hours earn the calculated rate; there must be positive available and billable capacity.
- The annual personal income target is after expenses, percentage platform fees and the manually chosen reserve. The reserve applies to remaining profit, not all revenue, and is not a legal tax estimate.
- Percentage fees apply to pre-tax billings, including recovery of project-only costs. Use an effective rate from your agreement; fee caps, tiers and country-specific rules are not inferred.
- The minimum hourly rate is rounded upward to two decimal places, then used for annual and project figures. Project quotes also round upward so currency rounding does not underfund the entered target.
- Project-only costs are additional to annual overhead and recovered without profit after percentage fees. Project scope buffer adds billable delivery hours; it does not modify the annual capacity.
- GST or sales tax, exchange-rate movements, bad debts, employee benefits and market willingness to pay are excluded. Include relevant personal saving goals in the income target and business overhead in expenses.
Questions people ask
Should I enter monthly or annual income and expenses?
Both inputs are annual. Multiply a monthly target or recurring monthly expense by 12, then add one-off annual costs. Project-only costs belong in their separate field so the same expense is not counted twice.
Why is the platform fee divided out instead of added?
If the fee is 20%, charging ₹100 leaves ₹80. To retain ₹100, charge ₹100 ÷ 0.8 = ₹125, not ₹120. The same gross-up applies when recovering a project-specific cost.
Is the tax reserve my actual Indian income tax?
No. It is a manual percentage held back from profit after business expenses and platform fees. It does not apply slabs, deductions, presumptive taxation, surcharge, cess, TDS or GST. Verify your actual obligations separately.
How should I account for holidays and unpaid administration?
Use working weeks and extra unpaid days for time you do not work at all. Use the billable percentage for working time spent on proposals, marketing, meetings or administration that you cannot invoice. Do not deduct the same leave twice.
Does this tell me what clients will agree to pay?
No. It finds a cost-and-income planning rate under your capacity assumptions. Compare it with your expertise, the project’s value, competing options and real client feedback. If capacity or demand is insufficient, a higher calculated rate is not a guaranteed solution.