How Much Should a Freelancer Charge Per Hour?
Setting your hourly rate is the most important pricing decision you will make as a freelancer. Charge too little and you work long hours for a modest income. Charge too much without proof of value and projects dry up. This guide gives you a formula that starts from your own numbers, then shows how to adjust it for the market.
Why copying an employee's hourly wage fails
Say an employee earns 60,000 a year. Over a standard 2,080-hour year that is about 28.85 per hour. If you charge that as a freelancer you will almost certainly earn less than the employee, even though you work just as hard. The employee's wage already includes things you now pay for yourself:
Taxes and social contributions, which an employer often partly covers.
Paid holidays, sick days and public holidays, which you must now fund from your own income.
Equipment, software, a workspace, insurance and accounting fees.
Unpaid time spent on sales, emails, admin and learning.
That is why a freelance rate is usually well above an employee's equivalent hourly wage. How much higher depends on your field and country, so treat a multiple of 1.5 to 2 as a rough starting point rather than a rule.
The formula
Work through four inputs. First, the take-home income you want after tax. Second, your expected tax rate. Third, your yearly business expenses. Fourth, the number of hours you can realistically bill.
Required revenue = take-home income / (1 - tax rate) + expenses. Hourly rate = required revenue / billable hours per year.
Example 1: a newer freelancer
You want 40,000 take-home. You expect to pay 20% in tax and have 2,000 of expenses. You bill 25 hours a week for 48 weeks, which is 1,200 hours.
Required revenue = 40,000 / 0.8 + 2,000 = 52,000. Hourly rate = 52,000 / 1,200 = about 43.33.
Example 2: an experienced specialist
You want 90,000 take-home, with a 30% tax rate and 8,000 of expenses. You bill 20 hours a week for 46 weeks, which is 920 hours.
Required revenue = 90,000 / 0.7 + 8,000 = about 136,571. Hourly rate = 136,571 / 920 = about 148.45.
Notice how much the billable hours matter. The same income goal with 30 billable hours a week would need a noticeably lower rate. That is why the next section is so important.
Be honest about billable hours
A 40-hour week does not mean 40 billable hours. Finding clients, writing proposals, sending invoices, answering messages and fixing your own tools all take time that nobody pays for. Many freelancers bill only 20 to 30 hours a week. If you work 40 hours and bill 25, your utilization is 62.5%.
Track your time for a month before you decide. Use the real number in the formula, not the number you hope for.
Compare with the market
The formula tells you what you need. The market tells you what clients will pay. Check job boards, public rate surveys and the websites of similar freelancers. Look at people with the same skills, experience and region.
If your required rate is far above the market, you have options: reduce expenses, specialize in a higher-value niche, move toward fixed-price work, or aim at clients who value your skill more. If the market pays more than your formula, your rate can be higher than you thought.
Hourly, daily and project rates
An hourly rate is only a base. Many freelancers quote a day rate or a fixed price instead, which hides the clock from the client and rewards efficiency. You can turn your hourly rate into a day rate by multiplying by the hours you bill per day, or work backwards from a yearly goal. For example, 85,000 of revenue over 180 billable days is a day rate of about 472.
When to raise your rate
Raise rates when you are fully booked, when clients never push back on price, when your skills have clearly grown, or once a year as a habit. Give existing clients notice, for example 30 to 60 days, and apply the new rate to new work first.
Common mistakes
Charging the same rate to every client regardless of project size or urgency.
Forgetting unpaid time, taxes and expenses in the formula.
Dropping your rate when a client negotiates instead of reducing the scope.
Never revisiting your rate after the first year.
Put it into practice
Use our free freelance rate calculator to try different goals, tax rates and hours. If you prefer to quote by the day, the day rate calculator does the same math. Then compare the result with the market and pick a number you can defend.