How to Calculate Your Freelance Rate
So, you're ready to take the plunge into the freelancing world—or maybe you’ve been freelancing for a while, but figuring out how to calculate your freelance rate still feels like a guessing game. We've all been there, staring at the screen wondering, “Am I charging too much? Too little? What if my rate scares clients off?”
Spoiler alert: Calculating your freelance rate doesn’t have to be as intimidating as it seems. In fact, once you break it down, it’s actually pretty simple. Whether you're brand new to freelancing or just trying to revamp your pricing, let’s walk through how to calculate your freelance rate step by step so you can feel confident asking for what you deserve (and stop second-guessing yourself!).
Why It's Important to Calculate Your Freelance Rate Accurately
First things first—why should you care about calculating your freelance rate properly? Can’t you just look at what others are charging and pick something similar? Sure, you could do that, but it’s not the best approach.
When you accurately calculate your freelance rate, you’re not just guessing what you’re worth. You’re ensuring that you’re compensated fairly for your time, skills, and the value you bring to your clients. Plus, it makes your freelancing sustainable long-term, meaning you won’t be working yourself into the ground for peanuts. We believe in advocating for yourself and earning what you deserve so we created a Rate Sheet that shows you exactly what others in your industry are making with their years of experience so you have the hard data to back up your rate.
Alright, enough talking about why—let’s dive into how to calculate your freelance rate!
1. Determine Your Desired Annual Income
The first step to calculate your freelance rate is to figure out how much you want to make in a year. This can be a bit of a personal decision, but here are a few things to consider:
How much would you like to take home after taxes?
What are your living expenses (rent, food, utilities, etc.)?
How much do you want to save for retirement or vacations?
Let’s say you want to make $70,000 per year. This number is going to be your starting point.
Tip: Be realistic about your income goals, especially if you’re just starting out. It’s okay to start with a lower number and adjust over time as your experience grows.
2. Add Up Your Business Expenses
This is where a lot of freelancers go wrong—they forget to account for the cost of running a freelance business. You need to factor in everything you spend to keep your freelance biz going, like:
Software subscriptions (think Adobe Creative Cloud, Grammarly, etc.)
Office supplies (laptop, phone, internet)
Marketing and advertising costs
Website hosting or portfolio platform fees
Taxes (yup, don’t forget about those!)
Let’s say your business expenses add up to about $10,000 per year. Now we’ve got two numbers: your desired annual income ($70,000) and your business expenses ($10,000).
Together, that’s $80,000 per year.
3. Estimate the Number of Billable Hours You'll Work
Here’s where it gets a little tricky—but don’t worry, we’re going to break it down. When you calculate your freelance rate, you have to remember that you’re not going to be billing for every single hour you work. You’ll need to account for non-billable hours too.
Non-billable hours include things like:
Administrative tasks (emailing, invoicing, project management)
Marketing your services
Professional development or learning new skills
Downtime between projects
Most freelancers find that about 50-60% of their time is spent on billable work. So if you’re working 40 hours a week, about 20-25 hours are likely to be billable.
Let’s say you want to work 48 weeks a year (hello, vacation time!). If you aim for 25 billable hours per week, you’d be working 1,200 billable hours in a year (48 weeks x 25 hours).
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4. Time to Calculate Your Freelance Rate!
Now for the part you’ve been waiting for—calculating your freelance rate. This is where the magic happens!
You’ve got your desired annual income + business expenses ($80,000) and your total billable hours (1,200). To calculate your freelance rate, divide your total income goal by your billable hours:
Freelance rate=80,0001,200=$66.67 per hour freelance rate=1,20080,000=$66.67 per hour
Voilà! Your base hourly freelance rate would be around $67 per hour.
5. Adjust for Experience and Market Rates
While $67 an hour might be the number you came up with based on your personal calculations, there’s one more factor to consider: the market. Depending on your experience level and industry, you might need to adjust your rate up or down slightly.
New freelancer: If you’re just starting out, you might charge a bit less to gain experience and build your portfolio. Maybe you start at $50 per hour and gradually increase your rate as you build confidence.
Experienced freelancer: If you’ve been in the game for a while and have a solid portfolio, don’t be afraid to bump up your rate. Many seasoned freelancers charge well over $100 per hour, depending on the type of work and industry.
Check out what others in your field are charging in our Rate Sheet, but don’t feel pressured to match their rates exactly. Your experience, niche, and the value you bring to the table all play a role in how to calculate your freelance rate.
6. Think About Project-Based Pricing
Now that you’ve calculated your freelance rate, let’s talk about how you apply it. Most freelancers don’t bill hourly forever—in fact, many prefer to switch to project-based pricing.
Why? Because clients love the predictability of knowing exactly what they’ll pay upfront, and as a freelancer, you can often earn more than you would if you were billing by the hour. Plus, as you get faster and more efficient at your work, you won’t be penalized for completing tasks quickly.
Here’s how you can calculate project rates using your freelance rate:
Estimate how many hours the project will take. (For example, a website content project might take 20 hours.)
Multiply that by your hourly rate. (In this case, 20 hours x $67/hour = $1,340.)
Add a buffer for revisions or unexpected changes (let’s say 10-15%).
Your final project rate would be around $1,500.
7. Don’t Forget About Taxes
Freelancers, we don’t have the luxury of having taxes taken out of our paychecks automatically, so it’s up to us to set aside enough to cover them when tax time rolls around. And trust me—you don’t want to be scrambling when the bill comes due!
When you calculate your freelance rate, factor in taxes. A good rule of thumb is to set aside about 25-30% of your income for taxes (this varies depending on where you live, so check local regulations).
Let’s do some quick math: If your freelance rate is $67 per hour, and you’re setting aside 30% for taxes, that leaves you with about $47 per hour after taxes. It’s super important to keep this in mind when calculating how much you’ll actually take home at the end of the day.
8. Reevaluating Your Freelance Rate Over Time
One of the best things about freelancing is that your rate isn’t set in stone. As you gain more experience, build your portfolio, and grow your business, you can—and should—raise your rates.
Here’s when you should consider recalculating your freelance rate:
You’ve gained new skills: Maybe you’ve taken some courses or gained new certifications that add to your value. Don’t be afraid to adjust your rate accordingly.
Demand for your services has increased: If you’re constantly booked and clients are knocking down your door, that’s a sign you can probably raise your rates.
You’ve been working for the same rate for a while: Inflation, cost of living increases, and just your general progression in the field should all factor into periodic rate adjustments. Consider revisiting your rate every year.
Remember, your freelance rate is all about balance. It should be competitive enough to attract clients, but also sustainable enough to support you and your business goals.
9. Communicating Your Rate to Clients
So, you’ve calculated your freelance rate—now comes the tricky part: telling clients. Talking about money can feel awkward, but it doesn’t have to be!
Here are some tips for confidently sharing your freelance rate:
Be clear and upfront: When a potential client asks for your rate, don’t dance around the topic. Be clear about your pricing structure and any additional fees (like for revisions or rush projects).
Justify your rate: You don’t need to go into full detail, but it helps to communicate the value you bring. If your rate is on the higher side, emphasize your expertise, unique skills, or fast turnaround time.
Stick to your guns: Clients will sometimes ask for discounts or lower rates, but don’t feel pressured to say yes. Remember—you’ve done the math to calculate your freelance rate, and you know what you’re worth!
Calculating your freelance rate isn’t just about picking a number out of thin air. It’s about figuring out what you need to make your business
