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Pricing

How to Set Your Freelance Rate (Without Guessing)

Ask ten freelancers how they set their rate and eight will describe some version of guessing: what the last job paid, what a friend charges, what felt safe to say on a call. The result is predictable — surveys of freelancers consistently find that a majority believe they undercharge, and the gap compounds every year it goes uncorrected.

There is a better way, and it takes ten minutes. You work backwards from the life you're pricing for, not forwards from what feels sayable.

Step 1: Start from take-home, not revenue

Decide what you actually want to keep in a year, after tax. Not billings — keepings. Say it's $80,000. That number is the anchor for everything else, and it's the number most pricing advice skips entirely.

Step 2: Gross it up for tax

As a freelancer you pay income tax plus the contributions an employer used to cover — self-employment tax in the US, National Insurance in the UK, social charges across the EU. For most Western freelancers a combined 25–35% is realistic. At 25%, keeping $80,000 means earning roughly $106,700 in pre-tax profit.

Step 3: Add your real expenses

Laptop depreciation, software, insurance, accounting, co-working, courses. Freelancers who track it honestly usually land between $3,000 and $12,000 a year depending on the field — photographers and video editors at the high end, writers at the low end. Add it on top: our example now needs about $114,700 in annual billings.

Step 4: Divide by hours someone will actually pay for

This is the step that quietly ruins naive rate math. A 40-hour week is not 40 billable hours. Prospecting, proposals, calls, invoicing, bookkeeping, and email eat 30–50% of every real freelance week. With four weeks off, a 40-hour week at 60% billable yields about 1,150 billable hours a year — not 2,080.

$114,700 ÷ 1,150 hours ≈ $100/hour. That's the floor for this example — the rate at which the year merely works out as planned. Charging $65 because it "sounded reasonable" would have delivered barely half the target income.

Run your own numbers in the free rate calculator — it does exactly this math, live.

The floor is not the price

Everything above computes a minimum. Your actual price should reflect value and positioning:

Raising rates on existing clients

The script that works is short and unapologetic: give notice, name the number, and offer continuity. "From March 1st my rate moves from $80 to $95/hour. Your current projects finish at the old rate." No essay about inflation, no permission-seeking. Expect to lose the bottom 10–20% of clients occasionally — losing the clients who only valued the discount is how the average rises.

Review your rate every six months, or immediately after any project where you were booked solid. Fully booked means underpriced.

Put it into practice

Ten minutes: run the rate calculator with honest inputs, round the result up, and use it in your next proposal. Then make the paperwork match the professionalism of the price — the free invoice generator handles that side.