What Is a Salary-to-Freelance Conversion?

How salary-to-freelance conversion works

A $100,000 salary converts to roughly $130,000 to $150,000 in freelance gross revenue, which works out to about $104 to $120 per hour on 1,250 billable hours. The 1.3x to 1.5x multiplier exists because freelancers pay for everything an employer used to cover. Self-employment tax adds 15.3% on net earnings instead of the 7.65% an employee pays. Health insurance, retirement contributions, paid time off, sick days, and equipment all shift from the company to the freelancer. The multiplier also absorbs unbillable time: you bill roughly 1,250 hours a year, not the 2,080 a salaried employee logs, because selling, admin, and gaps between clients consume the rest.

The conversion applies whenever someone leaves a job, evaluates a contract offer, or sets a starting rate without market data. It produces a floor, not a target. A $100,000 employee who charges $104 per hour matches their old take-home only after covering taxes and benefits — they earn no premium for the risk and instability they accepted.

The practical implication: divide the freelance gross by your realistic billable hours, not 2,080. A freelancer targeting $135,000 who bills 1,200 hours needs $112.50 per hour, while one who bills only 1,000 hours needs $135. Underestimating unbillable time is the most common reason converted rates fall short. Use the higher 1.5x multiplier when you carry expensive benefits or expect low utilization in your first year.