A $5,000 gig once left me with barely $2,800 of keep after costs, fees, and taxes, and I’d already mentally spent four thousand. That gap between headline and keep is why net-profit math deserves its own ritual, run before you accept the work rather than after you spend it.
The full waterfall, in order: gross billed, minus discounts, minus direct costs (subcontractors, materials, travel), minus platform and processing fees (Stripe’s cut, marketplace commissions), equals net profit, the number income and SE taxes apply to. Then set aside ~25–30{e0bed9560a59d6d3feee569f5ae3dad3ee14a646b3fccc2d16becbf099999e03} of net for those taxes to reach true keep. Sales tax collected runs alongside the whole waterfall but never inside it: collected, held, remitted, untouched.
Worked example: $5,000 gross − $200 processing − $800 costs = $4,000 net → ~$565 SE tax + ~$600–$880 income tax → roughly $2,550–$2,835 true keep. Barely over half the headline, typical for fee- and cost-bearing gig work, and exactly the figure that should drive accept/reject and pricing decisions.
Two habits compound from here. First, quote with the waterfall pre-run: if the keep doesn’t justify the calendar, raise the gross or decline. Second, track your keep rate (keep ÷ gross) per client and per service line, mine revealed that my “premium” rush work kept worse than standard projects once fees and hassle-costs cleared. Pricing changed the next week.
Takeaway: gross → costs → fees → net → tax set-aside → keep, decide on keep, never on gross.
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Open the Invoice Tax Breakdown Calculator in your browser (Split any invoice into subtotal, tax, and total, per line item). Type or paste your input, adjust the options, and copy the result. Everything runs locally on your device with no account and nothing stored, so the three steps below take seconds even for confidential work.
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