How to Set Your Freelance Rate in Canada
This is the pricing page. Whether the contract is even self-employment is employee versus contractor. Registering the name is how to register a business. The first people who pay the rate are the first ten clients. The opt-in that is not regular EI is EI for the self-employed, at $1.63 per $100 outside Quebec in 2026, up to $1,123.07, and only for special benefits after a 12-month wait. The return, once the invoices are real, is the self-employed tax guide. The point at which a corporation starts to matter is should you incorporate, and the salary-or-dividend choice after that is salary versus dividends.
- Start from the package you are replacing, or from the profit you need, not from a number that sounds professional.
- Divide by hours you can bill, not by hours you will work. Admin, sales, and empty weeks are not billable.
- Add both CPP shares, the benefits you now buy, and a cash reserve for the EI you do not get. Self-employed people do not pay into regular EI.
- GST/HST on the invoice is not your money. Keep it out of "what I earned."
- If the client sets your hours, tools, and rate, you may be an employee. Price a job, not a disguised salary.
The worksheet
Fill the lines with your numbers. The illustration further down is a method, not a quote.
| Line | What to put |
|---|---|
| 1. Income you need before tax | The salary you are leaving, or the profit that covers your year, plus benefits you will now buy yourself. |
| 2. Employer costs the salary hid | The employer's CPP share, and any benefit premiums the employer paid. On a contract you pay both CPP shares on pensionable self-employment earnings, up to the year's ceilings. Confirm the ceilings with CRA. The employer-equivalent half is generally deductible. It is still cash out the door. |
| 3. Billable hours | Weeks you will actually invoice, times hours per week a client pays. A 48-week year at 25 billable hours is 1,200 hours. A 40-hour week is not a 40-hour invoice. |
| 4. Hourly rate | Line 1 plus line 2, divided by line 3. That is the rate before GST/HST. |
| 5. Day or project rate | The hourly times the hours the project really takes, including revisions you have learned to expect. |
What the salary was hiding
| Load | On a salary | On an invoice |
|---|---|---|
| CPP | You pay the employee share. The employer pays the other share. You never see that second share, and it is still compensation. | You pay both shares up to the ceilings. Price them in. |
| EI | You pay a premium and can qualify for regular benefits if you lose the job. | No regular coverage. Special-benefit opt-in is optional, sticky after a claim, and capped. In 2026 the cap outside Quebec is $1,123.07. Put a cash reserve in the rate for the gap. The reserve design is the emergency-fund guide. |
| Benefits | Health and disability are often partly employer-paid. | You buy them or you go without. A rate with no disability premium is an unfinished rate. The policy is the disability guide. |
| Paid time off | Vacation and stats are inside the salary. | Unbilled weeks come out of the rate. So does admin. |
| Tax | Withheld. The return reconciles. | Nothing is withheld. Instalments are quarterly tax instalments. If the income moves a benefit, run the clawback framework before you celebrate the gross. |
An illustration of the gross-up
Suppose a salary of $120,000, and suppose you actually work 46 weeks after vacation. At 40 hours that is 1,840 hours, about $65 an hour of gross salary before the employer's CPP, benefits, and the value of paid time. The $65 is not your rate.
Suppose you can bill 1,200 hours after admin and empty weeks, and you want $130,000 before tax to cover a similar life, both CPP shares, and benefits you now pay. $130,000 divided by 1,200 hours is about $108 an hour before GST/HST. None of these hours or dollars is a market rate, a CPP ceiling, or a tax bracket. Substitute your billable hours and the package you are leaving. If the client will not pay the grossed-up rate, the salary is the better hourly.
Once you are registered, the tax on the invoice is the Crown's until you remit. The small-supplier test and the reporting period change. Confirm them in the side-hustle tax article. Do not bury the tax inside what you earned. Keeping business spending off the household card is business credit cards.
When the rate says you should not leave yet
If line 4 is a number nobody in your market pays, you do not have a pricing problem. You have a volume problem or a salary that is already the better deal. Raising prices later, once clients exist, is a separate script. Incorporation does not fix a rate the market will not pay. It adds a T2. Use it when you do not need all the profit to live on, or when liability or the client requires a company. None of those is a dollar threshold you heard at a meetup.
If the payer controls how, when, and where you work, provides the tools, and bears the chance of profit and loss, you can be an employee. The invoice rate is then the wrong structure. Negotiate it as a job, using total-compensation math.
Frequently asked questions
Should I quote hourly, daily, or a project?
Build the hourly so you know the floor. Quote a project when you can see the scope, using the hours the work actually takes. An hourly quote for an undefined job is how you end up cheaper than the worksheet.
Do I add GST/HST on top?
If you are registered, yes. Say so on the quote. The client who compares you to a salary is not comparing like with like, and the tax is not your fee.
What if I am still employed and this is a side rate?
The worksheet still applies to the extra hours, and the clawback article applies if a benefit depends on family income. Do not use a "mates rate" that trains the market, including you, to ignore CPP on the self-employed portion.
Sources
Related reading
- Employee versus contractor
- How to register a business
- EI for the self-employed
- Should you incorporate
- Salary versus dividends
- Getting your first 10 clients
A rate without a return is a guess.
CPP, instalments, and GST are the half of the invoice that is not yours. The 2026 tax guide is that half.
Get the 2026 Tax Guide — $49 CAD
