How to price your freelance work (without guessing)

By Kepler Oates · Updated Oct 22, 2026

Most freelancers set their first rate by looking at what someone else charges, picking a number that feels safe, and hoping it works out. It usually doesn't. The number that feels safe is almost always too low, because it ignores the hours you can't bill and the costs an employer used to cover.

This guide is for anyone setting or resetting a freelance rate: designers, writers, developers, editors, consultants, virtual assistants. You'll build your rate from the bottom up, see a full worked example, and learn how to handle the two hardest moments in pricing: raising your rate and answering "can you do it cheaper?"

Start with what you need, not what others charge

Market rates matter, but they come second. First you need to know your floor: the rate below which freelancing quietly costs you money. That floor comes from four numbers.

1. Your income goal

This is what you want to keep for yourself each year after business costs and taxes. Think of it as your take-home pay. Be honest here. If you need $5,000 a month to live comfortably, that's $60,000 a year, not "whatever I can get."

2. Your business costs

These are things your employer used to pay for, or that only exist because you run a business:

• Software, tools and subscriptions
• Equipment and its replacement over time
• Health insurance and retirement savings (if you're paying your own)
• Accounting, legal and banking fees
• Marketing, website and professional memberships
• Training to keep your skills current

Add them up for a year. Most people are surprised by the total.

3. Taxes

Freelance income usually has no tax withheld, so your rate has to cover it. In the US that includes self-employment tax as well as income tax. Our guide to setting aside money for side-hustle taxes walks through how to estimate your share; the Side-Hustle Tax Set-Aside Calculator will give you a working percentage.

4. Your real billable hours

This is where most pricing goes wrong. A full-time job is roughly 40 hours a week for 52 weeks. As a freelancer, you can't bill all of those hours. You also spend time on:

• Finding clients: emails, calls, proposals
• Admin: invoicing, bookkeeping, scheduling
• Learning and keeping your tools up to date
• Revisions and back-and-forth that you don't bill for
• Holidays, sick days and slow weeks

Only the hours a client actually pays for count. For many freelancers that ends up well under 40 a week. Track a few typical weeks if you're not sure.

The formula

Once you have those four numbers:

1. Revenue needed before tax = (income goal + business costs) ÷ (1 − tax rate)
2. Billable hours per year = (52 − weeks off) × billable hours per week
3. Minimum hourly rate = revenue needed ÷ billable hours per year

This is the same approach the Freelance Rate Calculator uses. It applies your tax rate to income plus costs, which keeps the estimate on the cautious side.

A worked example (with the math)

Say you're a freelance writer with these numbers:

Input	Value
Take-home income goal	$60,000 a year
Business costs	$6,000 a year
Tax rate to set aside	25%
Billable hours per week	25
Weeks off per year	6

Step 1: Revenue needed. $60,000 + $6,000 = $66,000 $66,000 ÷ (1 − 0.25) = $66,000 ÷ 0.75 = $88,000 a year

Step 2: Billable hours. 52 − 6 = 46 working weeks 46 × 25 = 1,150 billable hours a year

Step 3: Hourly rate. $88,000 ÷ 1,150 = $76.52 an hour

Day rate: if those 25 billable hours are spread over 5 days, that's 5 billable hours a day. $76.52 × 5 = about $383 a day.

Monthly revenue goal: $88,000 ÷ 12 = about $7,333 a month.

Now compare that with the "salary math" many beginners use: $60,000 ÷ 2,080 hours (40 hours × 52 weeks) = $28.85 an hour. Charge that, and you'd fall far short of your goal, because it ignores costs, taxes and every unbillable hour.

Treat $76.52 as your floor, not your ceiling. Round up to a clean number like $80, and adjust upward for experience, specialist skills and demand.

Hourly, project or value pricing

Once you know your floor, you can choose how to present it to clients.

Hourly pricing

You charge for time spent.

• Good for: unclear scope, ongoing support, early work with a new client.
• Downside: the faster and better you get, the less you earn per task. Clients may also watch the clock.

Project pricing

You quote one price for a defined result.

• How to set it: estimate the hours, add a buffer for revisions and surprises, and multiply by your rate. Using the example: a project you think will take 20 hours, plus a 25% buffer, is 25 hours. 25 × $80 = $2,000.
• Good for: clear scope. Clients like knowing the price up front.
• Downside: if you underestimate or the scope grows, you absorb the cost. Write down exactly what's included and how many rounds of revisions.

Value pricing

You price based on what the result is worth to the client, not how long it takes you.

• Example: a sales page that could bring a client significant new revenue may be worth far more than 25 hours of your time.
• Good for: experienced freelancers whose work has a clear, measurable business impact.
• Downside: it requires understanding the client's business and having the confidence to explain your price. Your hourly floor still acts as a sanity check.

Many freelancers start hourly, move to project pricing as they get better at estimating, and use value pricing for their best-fit clients.

Raising your rates

Your costs rise, your skills improve and demand changes. Your rate should move too.

• Raise rates for new clients first. It's the lowest-risk test. If new clients say yes, your rate was too low.
• Give existing clients notice. A short, friendly message with a clear date works well: "From [date], my rate for new projects will be $X." No long apology needed.
• Review your rate on a schedule. Once or twice a year keeps it from drifting behind your costs.
• Know the math of losing clients. If you raise your rate by 20%, you can lose about a sixth of your billable hours (1 ÷ 1.2 ≈ 0.833) and still earn the same, with more time free for other work.

Handling "can you do it cheaper?"

This question isn't an insult. It's a negotiation. You have better options than simply saying yes.

• Reduce the scope, not the rate. "I can do it for $1,500 if we drop the second round of revisions and the social media version."
• Offer a smaller first step. A paid audit, outline or pilot lets the client try you without the full commitment.
• Explain what the price includes. Clients often compare your full-service quote with a bare-bones one.
• Be willing to say no. If the budget doesn't cover your floor, the project costs you money. A polite "That's below what I can do this work for, but I'd be glad to help if the budget changes" keeps the door open.

Common mistakes

• Dividing your old salary by 2,080 hours. It ignores costs, taxes and unbillable time.
• Assuming 40 billable hours a week. Admin and sales time is real time.
• Forgetting time off. Holidays and sick days have to be paid for by the weeks you do work.
• Leaving taxes out. Your rate has to cover the tax bill, not just your living costs.
• Discounting the rate instead of the scope. Once a client gets a lower rate, it's hard to raise it later.
• Never revisiting your rate. Rising costs slowly shrink your real income.

Do the work this week

1. Calculate your floor. Open the Freelance Rate Calculator, enter your income goal, yearly business costs, tax rate, billable hours per week and weeks off. Write down the hourly rate, day rate and monthly revenue goal it shows.
2. Check your billable hours. For the next five working days, note how many hours were actually paid for. If it's lower than you entered, update the calculator.
3. Rewrite one quote. Take your next proposal and price it from your floor: estimated hours plus a buffer, times your rate. Write down exactly what's included.

Frequently asked questions

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