How much do freelancers need to make?

The amount a freelancer needs to make varies based on location and lifestyle, but mathematically, you must make your total monthly expenses divided by (1 - your tax rate). If your expenses are $4,000 and your tax rate is 25%, you must make at least $5,333 per month.

How can I lower my freelance break-even point?

You can lower your break-even point by auditing and cutting unused software subscriptions, reducing personal lifestyle creep, and optimizing your tax structure (such as electing S-Corp status) to lower your effective tax burden.

The Freelance Break-Even Point Explained

Q: What is a freelance break-even point?

A freelance break-even point is the exact minimum amount of gross revenue you must generate every month to cover your personal living expenses, your business overhead, and your estimated taxes. At this number, your business profit is exactly zero.

Monthly Personal Expenses

Rent, food, life.

Monthly Business Expenses

Software, hosting, ads.

Estimated Tax Rate (%)

Desired Savings Buffer (%)

Target Billable Hours Per Month

Used to calculate your minimum survival hourly rate.

The Survival Line

You must generate this amount every month to not lose money.

$ 5,230

$62,760 / year

Minimum Hourly Rate Needed By Volume

80 hrs/mo $65

60 hrs/mo $87

40 hrs/mo $130

$29

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What is a Freelance Break-Even Point?

In the freelance world, your break-even point is the exact amount of gross revenue you must generate every month to cover your personal living expenses, your business overhead, and your tax liabilities. If you earn exactly this amount, your bank account remains flat. Below this number, your freelance business is actively losing money and sliding into debt.

Why Freelancers Underestimate Expenses

Most beginners calculate their break-even point by simply adding up their rent and groceries. This is a fatal mathematical error. A true survival line must include:

The Tax Gross-Up: If your expenses are $3,000, you cannot just earn $3,000. You have to earn enough to pay $3,000 after the IRS takes 25%.
Hidden Business Overhead: Software subscriptions, domain renewals, internet bills, and transaction fees (like Stripe's 2.9%).
The "Dry Spell" Buffer: Freelance income is volatile. Your break-even point should ideally include a 5-10% savings buffer to cover months where clients pay late.

Example Breakdown: The $4,000 Myth

Let's look at a real scenario. Sarah needs $4,000 a month to pay her personal bills and $500 to run her design business. She assumes she needs to make $4,500. However, Sarah is in a 25% effective tax bracket.

To actually have $4,500 left over, Sarah must generate $6,000 in gross revenue ($6,000 - 25% tax = $4,500). If Sarah prices her projects based on a $4,500 goal, she will find herself unable to pay her taxes at the end of the year.

Break-Even vs. Profit Goals

Your break-even number is your survival line. It is not a strategy. Once you know this number, you should immediately head over to our Income Goal Calculator to set a target that allows you to actually build wealth, invest, and grow your business.