How to Make Sure You Charge Enough for Freelance Work

As freelancers, we’re constantly being reminded to “up your rates!” and “charge what you’re worth!” But what exactly does that mean? How do you know if you’re charging enough for your work? Here’s my guide on how to set freelance rates that work for you and your clients.

This post will cover:

  • How to set your freelance rates
  • How to find the “going rate” for freelancers in your industry
  • Freelance hourly rates vs. project fees
  • Top tip for freelancers who want to make more money

How to set your freelance rates

1. Set your income goal

How much do you want to make per year? Start with this number and work backward, by calculating how many working hours you have each year. For example:

  • I want to make $65,000 a year, before taxes
  • I’m willing to work 32 hours (or 4 x 8 hour days) per week
  • I plan to take 4 weeks vacation every year
  • I’ll add 2 weeks to account for unforeseen circumstances like illness or bereavement

52 weeks in a year – 6 weeks = 46 working weeks in your year

46 weeks x 32 hours = 1472 working hours per year

$65,000 ÷ 1472 hours = $44 per hour

$44/hour is what you’d need to charge to hit your salary goal of $65,000 (before taxes).

But wait, what about billable vs. non-billable time?

As a freelancer, not every hour you work can be charged out to clients. You also need to allow time for:

  • Admin and invoicing
  • Replying to emails
  • Prospecting and securing new clients
  • Marketing your business
  • Meetings and networking (unless billable to a client)
  • Professional development and upskilling (eg., taking a course)
  • Eating lunch!

Billable vs. non-billable hours will be personal to you and your goals. But 60/40 is a good estimate. Back to our example, take that 40% off your billable time:

  • 1472 – 40% = 883.2 billable working hours per year
  • $65,000 ÷ 883.2 hours = $74 per hour

$74/hour is what you’d need to hit your $65,000 annual salary goal.

Don’t forget why you’re going freelance. More freedom, flexible working hours, extra time to spend with your family—we all have our reasons for going it alone. Keep your goals in mind when setting your freelance rates and charge enough to make them happen.

2. Calculate your costs

What about expenses?

When you’re freelance, you’re responsible for everything that an employer would normally take care of:

  • Health insurance (depending on your country)
  • Paying your taxes
  • Professional and/or business insurance
  • Equipment
  • Renting workspace or heating, electric, and broadband for your home office
  • Software subscriptions
  • Freelancer website and hosting
  • Marketing spend
  • Travel costs

Remember to take all this into account when setting your freelance rates. When you start crunching numbers, it’s easy to see why most freelancers aren’t charging enough.

Moving from employment to freelance work? Check out this freelance day rate calculator to see what daily rate you’d need to meet your salary goal. It’s aimed at journalists but works for any freelancer.

How to find the “going rate” for freelancers in your industry

How much you can charge will depend on your industry, skill level, experience, portfolio or track record, and your ability to negotiate.

Not sure what other freelancers charge? Just ask! 

As freelancers, we often shy away from talking about money. But this means we all lose out on important information and are more likely to under-value our services. Join LinkedIn groups or Facebook communities for freelancers in your niche and start building your network. When I ask friends or colleagues about how they price things, they’re usually happy to share—especially as they’re curious about my rates too.

Here are some resources to help you find the average rate in your industry:

Rates for freelance writers

Rates for editors and proofreaders

  • SFEP suggested freelance rates for editors and proofreaders in the UK.

Rates for artists and illustrators

Rates for designers and developers

Rates for IT freelancers

  • IT jobs watch includes average day rates for freelance developers, analysts, and project managers.

If you decide to charge a project fee instead of an hourly rate, it’s still useful to keep track of your hours. Try a free time-tracking app like Toggl to make it easy. That way, you can work out if you’re charging enough and check if per project pricing is actually more profitable for you. It can be a real eye-opener and will help you quote more accurately.

Freelance hourly rates vs. project fees

When I started out as a freelancer, my first question was “How much should I charge per hour?” But I quickly realized that charging set fees per project can work well too. Here’s a quick overview of the hourly rates vs. project fees.

Advantages of hourly pricing:

  • Useful when working with agencies or temping, as most will ask for your freelance day rate
  • You don’t lose out if the scope of a project changes or it takes longer than expected
  • Easy to estimate your potential income by calculating your billable hours

But:

  • Your hourly rate must cover all of your costs (tax, tools, time off, etc.)
  • Risk of undervaluing your work (eg., it takes you 5 hours to design a leaflet that generates $15,000 in income for your client)
  • You’re penalized for working quickly

Advantages of pricing per project:

  • You can charge based on the value of your work rather than hours spent
  • You’re not penalized for working faster as you get to know a client/project
  • Helps clients stay within budget

But:

  • If you misjudge the complexity of a project, you could earn a low hourly rate
  • You need a solid contract to protect from scope creep and changes
  • You need to be confident and able to justify your rates

Top tip for freelancers who want to make more money

Avoid freelancing platforms that take a high percentage of your earnings. While it’s not impossible to make a living on freelance sites, most attract low-budget clients and you’ll be competing on price with thousands of other freelancers, especially if you’re just starting out.

Build your own portfolio website instead and use it to showcase your skills. That way, you have complete control over how you present yourself online, what services you offer, and how much you charge.

If you’re new to freelancing or not sure about your rates, I hope you’ve found this post useful. Once you find out your idea rate, check out my next post on How to Ask for More Money as a Freelancer.

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