How to set your freelance rate (what to charge)

“How much should I charge?” is the question almost every freelancer gets wrong at the start — usually by pricing too low. The fix is to stop guessing and work backwards from the life you want to fund.

Why a freelance rate isn’t a salary hourly wage

If you earned $60,000 as an employee, that’s roughly $30/hour — so it’s tempting to charge $30–40 and feel generous. That’s a trap. As a freelancer you also cover:

Your own tax (no employer withholding it for you);
Business expenses — software, equipment, insurance, fees;
Non-billable time — admin, sales, invoicing, learning;
Time off — holidays, sick days, gaps between projects.

And you’re only paid for billable hours, which for most full-time freelancers is 20–30 a week, not 40. Your rate has to absorb all of that.

The work-backwards method

Start with target take-home pay. What do you want to keep for the year?
Gross it up for tax. If you set aside ~25%, divide take-home by 0.75.
Add business expenses. That total is the revenue you need to invoice.
Divide by realistic billable hours. e.g. 25 h/week × 46 weeks ≈ 1,150 hours.

Example: $60k take-home ÷ 0.75 = $80k, + $6k expenses = $86k to invoice. $86k ÷ 1,150 billable hours ≈ $75/hour (about a $450 day rate at 6 billable hours).

That’s far above the “$30/hour” instinct — and it’s the floor, not the ceiling. Run your own numbers with the freelance rate calculator.

Then price by value, not just hours

The calculation gives you a floor — the rate below which you’re losing money (check what each job actually leaves you with using the profit margin calculator). Above it, charge for the value and outcome, not the hours: a logo that wins a client millions isn’t priced by time. Where you can, quote a fixed project price (it rewards efficiency and is easier for clients to approve) rather than billing hourly.

Common mistakes

Anchoring to an employee salary — it ignores tax, expenses and downtime.
Assuming 40 billable hours — sets your rate ~40% too low.
Never raising rates — review annually and on every new client.
Competing on being cheapest — it attracts the worst clients and a race to the bottom.

Now lock it in

Once you know your rate, put it to work: send a clear quote, lock the scope and payment terms into a contract, then invoice it. And read how to write a quote and how to prevent scope creep so the rate you set is the money you actually keep.