Setting your day rate: the method beyond the calculator
As mentioned in the note on why I went freelance, the decision to go freelance wasn't primarily about the day rate. But once that decision is made, setting a day rate becomes a very concrete question, one that "I'll look at what others charge" doesn't really answer: another freelancer's rate covers their own cost structure, not yours.
The question reversed: start from what the rate needs to cover
The right method doesn't start from a number you'd like to hit, it starts from everything a day rate has to fund, then computes the number that results from that. Four line items, in the order they stack up:
| Line item | What it represents | Why it gets forgotten |
|---|---|---|
| Target net income | What's actually left in the bank once everything is paid | Billed rate and net income get conflated |
| Legal status charges | Social contributions, corporate tax, depending on the chosen status (micro-entreprise, umbrella company, SASU, EURL) | The charge rate can be twice as high depending on status |
| Non-billable days | Vacation, prospecting, training, admin, activity gaps | People often assume 220 billed days when reality is closer to 150-180 |
| Expenses and tools | Equipment, professional liability insurance, accountant, software | Often minimized because each one looks marginal on its own |
The calculation, with illustrative numbers
Take a purely illustrative example, not a rate recommendation: targeting €45,000 of net annual income, under a French SASU structure (social and tax charges representing roughly 55% of billed revenue once salary and dividends are optimized, a rough order of magnitude that varies a lot depending on the compensation chosen), with 160 actually billed days out of 220 working days in the year (the rest: prospecting, training, vacation, activity gaps):
Required revenue = target net income ÷ (1 − charge rate)
= €45,000 ÷ (1 − 0.55)
= €100,000
Minimum day rate = required revenue ÷ billable days
= €100,000 ÷ 160
≈ €625 / day
That €625 figure is only a coverage floor, before any negotiation margin, before a cash safety buffer, before accounting for how scarce the actual expertise being sold is. It's a rate that avoids losing money, not an optimal one.
Why 160 billed days, not 220
This is the assumption most often underestimated by a freelancer starting out: 220 working days in a year doesn't mean 220 billed days. You have to subtract vacation (usually unpaid as such), prospecting time between two engagements, ongoing training (essential with no employer to fund or mandate it), and the activity gaps that happen even with a solid network. A ratio of 70-80% billed days out of working days is already optimistic for most profiles.
What the calculation doesn't replace: reading the market
This method gives a floor, not a target rate. Above that floor, the actual rate depends on factors the calculation doesn't capture: how scarce the expertise is (a niche topic, like counterparty risk or applied hexagonal architecture, negotiates differently than a generalist skill), the engagement's length and criticality, and the ability to say no to an underpaid mission instead of accepting out of fear of an activity gap.
The day rate is only half the equation
This calculation answers "what rate should I ask for", but once that rate is obtained, the next question is "what's actually left, once the charges of the chosen legal status are paid?". That's exactly the reverse question TJM2Net answers: converting a billed day rate into monthly net income across four legal statuses (micro-entreprise, umbrella company, SASU, EURL), with every calculation step shown rather than a raw result. The two problems are symmetric: this one starts from the need to work back to the rate, the tool starts from the rate to work back to the net actually received.