The question "should I go freelance?" is almost always framed incorrectly as a comparison between your current salary and a target hourly rate. The real comparison is much more nuanced.
What your employer actually pays for you
A $100k salary costs your employer approximately $130–145k in total employment cost:
| Component | Cost |
|---|---|
| Salary | $100,000 |
| Payroll taxes (employer portion, ~7.65%) | $7,650 |
| Health insurance (employer contribution) | $8,000–15,000 |
| 401k match (3–6%) | $3,000–6,000 |
| Equipment, office space | $3,000–8,000 |
| Recruiting, onboarding, management overhead | $5,000–15,000 |
| Total employer cost | ~$127–152k |
As a freelancer, you bear all of these costs yourself. Your $100k equivalent gross freelance revenue — before accounting for any of these — is worth significantly less in take-home pay than $100k salary.
The non-billable time multiplier
Freelancers typically bill 50–70% of their working hours. The other 30–50% goes to business development, admin, invoicing, and downtime between projects. If you work 2,000 hours/year and bill 65% of them, you have 1,300 billable hours to cover your full annual cost.
Use the Freelance Rate Calculator above to run these numbers for your specific situation — the right rate depends on your income target, tax rate, and billability.
When freelancing financially makes sense
Freelancing beats employment financially when: - Your billable rate is 2.5–3× your equivalent employee hourly rate - You can maintain 60%+ billability year-round - You can access equivalent health insurance at reasonable cost - Your work involves skills with high per-hour market value (specialization premium)