How to Set Your Freelance Rate (So You Actually Take Home Enough)

Why your salary is the wrong starting point

An employer pays for far more than your salary: payroll taxes, paid holiday, sick days, equipment, software, and downtime between projects. As a freelancer, all of that comes out of your rate. Charging your old hourly equivalent means absorbing every one of those costs yourself.

Start with the income you need

Decide the annual income you want to take home, then add your annual business expenses (software, equipment, insurance, accounting). That total is what your billable work must actually generate before you keep a penny.

Subtract the days you cannot bill

There are about 260 weekdays a year. Remove holiday, public holidays, sick days, and admin or marketing time, and you are left with your billable days. Many full-time freelancers bill only 50-70% of their working days - the rest goes to finding work, invoicing, and learning.

Worked example

Income target 75,000, expenses 6,000, so 81,000 needs to be earned. Of 260 weekdays, take off 25 holiday, 5 sick, and assume 70% billable utilisation on the rest: (260 - 30) x 0.70 = about 161 billable days. Day rate = 81,000 / 161 = about 503 per day. At an 8-hour day that is roughly 63 per hour - noticeably higher than the naive salary-divided-by-hours figure, and that is the point.

Day rate vs hourly vs project pricing

Hourly rates punish you for being fast and cap your income at your hours. Day rates are cleaner for booked work. Project (fixed) pricing is usually best once you know how long work takes, because it ties your fee to the value delivered rather than the clock. Many freelancers quote project fees but calculate them from a day rate behind the scenes.

Common mistakes

• Forgetting tax - your rate is pre-tax; set money aside from every invoice.
• Assuming 100% billable days - even busy freelancers lose a third of their time to non-billable work.
• Never raising rates - review annually; existing clients rarely volunteer a raise.
• Competing on price - the cheapest freelancer attracts the most demanding, least loyal clients.

Use the Freelance Rate Calculator

The Freelance Rate Calculator works backwards from your income target, expenses, working days, time off, and billable utilisation to give you a defensible day and hour rate. Adjust the utilisation slider to see how much your rate must rise if you can only bill part of your week.

Frequently asked questions

Should I show my hourly rate to clients?

Often no. Clients anchor on the hourly number and start counting hours. Quoting a project fee or day rate focuses the conversation on the outcome. Calculate from an hourly rate privately, but present the price in the format that best fits the work.

How much should I charge as a beginner?

Beginners often undercharge out of fear, then get stuck. Use the same backward calculation with a realistic (lower) income target, but do not price below what covers your costs and taxes. Raise rates as your portfolio and speed improve.