How to Price Freelance Work: Rates, Formulas & Real Examples
Most freelance rates are copied from a competitor's website or reverse-engineered from a salary by dividing by 2,000 hours. Both methods underprice. A sustainable rate starts from your costs — including the taxes and unpaid hours employment used to hide — and divides by the hours you can actually bill, which are far fewer than the hours you work.
The billable-hours reality
A full-time year is 2,080 hours. Remove holidays, vacation and sick days and you are near 1,850. Remove sales calls, admin, invoicing and marketing — typically 30–40% of a solo practice — and billable time lands near 1,100–1,250 hours. To net what a $90,000 salary provides, after self-employment tax, benefits you now buy yourself (health insurance, retirement), software and a profit margin, the required billing is often near $130,000 — which at 1,150 billable hours is about $113 an hour. The common mistake of charging $45 (salary ÷ 2,000) quietly pays you half of what you intended.
From hourly to project pricing
Hourly pricing sells your time; project pricing sells an outcome, and it rewards the speed that experience brings. Price a project from the hourly floor, never below it: estimate hours honestly, multiply by your rate, then adjust for the value to the client and the risk you absorb (fixed price means overruns are yours). Add a rush premium rather than absorbing urgency for free. Raise rates for new clients first — existing clients follow at renewal — and expect the correct price to lose some enquiries. A 100% close rate is not success; it is evidence the price is too low.
- Rebuild your rate whenever a major cost changes — taxes, insurance, rent.
- Track realised rate (project fee ÷ actual hours) after every project; it is the only honest measure.
- Deposits of 30–50% before starting are standard risk management, not rudeness.
Questions, answered
Should I show my hourly rate publicly?
Publishing a rate filters enquiries and builds trust, but anchors negotiation. Many established freelancers publish a project minimum instead and keep the hourly maths private.
How do I raise rates with existing clients?
Give notice at a natural boundary (new project, new quarter), state the new rate plainly, and keep the tone brief. Clients who value the work adjust; the ones who leave free capacity for better-fit work.
Reviewed by Tahir Shehzad, ACMA. Figures are reviewed against the sources on our methodology page. This guide is education, not personal financial advice.