Freelance pricing

How Much Should I Charge as a Freelancer?

If you've ever stared at a blank quote wondering whether $40 or $140 an hour is "right," you're not alone. The honest answer: your rate isn't a number you guess — it's a number you calculate backwards from the life you want to fund. Here's the formula, with real numbers.

Why "salary ÷ 2080" is wrong

The most common advice is to take the salary you'd want as an employee and divide it by 2,080 (40 hours × 52 weeks). So a $80,000 salary becomes about $38/hour. That feels reasonable, which is exactly why it's dangerous — it quietly underpays you in three ways:

• You don't bill 2,080 hours. Sales calls, proposals, invoicing, email, admin, and marketing are unpaid. Most full-time freelancers bill only a fraction of the hours they work.
• You pay your own everything. No employer is covering your health insurance, software, hardware, retirement, paid time off, or sick days. That all comes out of your rate.
• You pay self-employment tax. A salary figure is pre-tax in a way that already had payroll taxes partly handled by an employer. As a freelancer you owe self-employment tax on top of income tax.

Match an old salary at $38/hour and you'll end up earning far less than you did as an employee, while carrying all the risk. The right approach runs the math in the opposite direction.

The real freelance rate formula

Start with the money you actually want to keep, then add back everything that comes out before it reaches your pocket. In order:

1. Take-home goal — the cash you want after tax, per year.
2. + Business expenses — software, gear, subscriptions, insurance, accounting.
3. + Profit buffer — a margin for slow months, growth, and reinvestment (think 10–20%).
4. Gross up for tax — divide by (1 − tax rate) so the rate survives the tax bill.
5. ÷ real billable hours — the hours clients genuinely pay for, not a fantasy 40-hour billable week.

Written as one line:

Hourly rate = ((Take-home + Expenses + Profit) ÷ (1 − Tax%)) ÷ Billable hours per year

A worked example

Let's say you want to take home $80,000 a year. Here's the math, step by step:

• Take-home goal: $80,000
• + Business expenses ($6,000): $86,000
• + 10% profit buffer ($8,600): $94,600 — this is your pre-tax revenue target
• Gross up for a 28% effective tax rate: $94,600 ÷ (1 − 0.28) = $131,389 in revenue you need to invoice
• Billable hours: 25 hours/week × 46 working weeks = 1,150 hours
• Required rate: $131,389 ÷ 1,150 = ≈ $114/hour

So the rate that funds an $80,000 take-home isn't $38 — it's about $114/hour, three times the naive number. That gap is exactly why so many freelancers feel like they're working constantly and still coming up short.

The billable-hours reality

The single biggest mistake is overestimating billable hours. A 40-hour work week does not mean 40 billable hours. Between finding clients, scoping work, sending invoices, chasing late payments, and answering email, even a busy full-time freelancer typically bills 20–30 hours a week. Subtract holidays, sick days, and unpaid time off, and a realistic year lands around 45–48 working weeks.

That's why the example used 1,150 billable hours instead of 2,080. If you optimistically plug in 2,080 hours, your calculated rate collapses to about $63 — and you'll spend the year wondering why your bank balance never matches the number you "charge." Be honest about the denominator and the rate takes care of itself.

When to stop charging hourly

Hourly billing is a useful floor for knowing your minimum, but it has a ceiling problem: the only way to earn more is to work more hours, and clients instinctively try to shrink the clock. Once you understand a type of work well, move toward packages and value pricing:

• Fixed-price packages. "A 5-page website for $4,500" is easier for a client to approve than an open-ended hourly meter, and it rewards you for being fast and experienced instead of penalizing you.
• Tiered options. Offer good / better / best. Most clients pick the middle, and the top tier quietly raises your average project value.
• Value pricing. Price against the outcome, not the inputs. A landing page that lifts a client's revenue by $50,000 is worth far more than the hours it took to build.

Use your hourly floor as a private sanity check: estimate the hours a package will take, multiply by your true rate, then add padding for scope creep. If the fixed price comfortably clears that floor, you're protected even when a project runs long.

How to raise your rates

Most freelancers are underpriced and stay that way out of fear. Raising rates is less scary when you do it deliberately:

• Raise on new clients first. Quote new prospects 15–25% higher than your current rate. You lose nothing if they say no, and you learn where the market resistance actually is.
• Give existing clients notice. A short, friendly message — "Starting [date], my rate will be $X" — with 30–60 days' lead time is standard and expected.
• Anchor to value, not hours. When you raise rates, point to results and reliability, not the calendar. Clients pay for outcomes and peace of mind.
• Let some clients go. If a rate increase pushes out your lowest-paying, highest-stress clients, that's the system working — it frees capacity for better-fitting work.

Recalculate your true rate at least once a year. Expenses rise, your skills compound, and the rate that was right two years ago is almost certainly too low today.

The bottom line

Don't ask "what do other freelancers charge?" Ask "what rate funds the income, expenses, and buffer I actually need, given the hours I can realistically bill?" That number is your floor. Strong positioning, a clear niche, and confident proposals are how you charge well above it.