How to price freelance work
Nobody hands a freelancer a salary band. Here's how to work out a number from your costs, your real billable hours, and what the work is worth to the client.
What you're actually selling
Clients think they're buying your time. They're buying a result they can't produce themselves, delivered without them having to hire, train, or manage anyone. Price the second thing.
Why freelancers get this wrong
Almost every underpriced freelancer made the same mistake: they took their old salary, divided it by 2,080 hours, and quoted that. That number assumes an employer is paying your pension, your holiday, your sick days, your software, and every hour you spend on admin, invoicing, and chasing work that never lands. You are paying for all of it now.
How to work out your number
Start with what you need, not what you're worth
Add up your personal costs for a year, your business costs, the tax you'll owe, and what you want to put aside for pension and time off. That total is what the year has to produce. It's an arithmetic problem, and it has nothing to do with confidence.
Divide by real billable hours, not working hours
A full-time freelance year is not 2,000 billable hours. Once you account for admin, sales, marketing, holiday, illness, and the weeks with no work in them, 1,000 to 1,200 is a realistic ceiling. Dividing by the honest number is what separates a rate that works from one that quietly loses money every month.
Treat the result as a floor
The number you just calculated is the point below which you're working at a loss. It is not your price. Your price sits above it, and how far above depends on your track record, how specialised the work is, and how badly the client needs it solved.
Stop quoting the floor as soon as you can
Once you can point at outcomes you've produced before, move the conversation from hours to results. That's the move from an hourly rate to a project fee, and eventually to pricing on value. It's the only route to earning more without working more.
Pricing models that fit freelancers
Fixed project fee
One number for a scoped deliverable. Clients get certainty, and finishing early pays you instead of costing you.
Retainer
The fastest way out of feast-and-famine. Predictable income makes every other pricing decision less desperate.
Value-based pricing
Where the ceiling disappears. Once you can tie your work to money the client makes or saves, your hours stop being the unit.
Think twice about: Cost-plus pricing
Marking up your costs ignores both the market and the client's upside entirely. It's the most reliable way to be the cheapest person in the room.
Mistakes that cost you money
- Quoting your old salary divided by 2,080 hours, which prices in none of the costs an employer used to absorb.
- Naming a number before you understand what the work is worth to the client's business.
- Discounting to win a first project, then discovering the client expects that price permanently.
- Never raising rates on long-standing clients, so your best relationships become your worst-paid ones.
Ask these before you quote
- What happens to the business if this doesn't get done?
- Who else has tried to solve this, and what did that cost?
- Who signs this off, and is the budget already approved?
- What does success look like in six months, in numbers?
Freelancers: frequently asked questions
How do I work out my freelance rate?
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Total the income you need for a year, add your business costs and the tax you'll owe, then divide by the hours you can realistically bill — usually 1,000 to 1,200, not 2,000. That gives you a floor. Your quoted price should sit above it, with the gap set by your experience and what the work is worth to the client.
Should I tell clients my hourly rate?
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Only if hours are what you're selling. Naming a rate invites a comparison with everyone cheaper and moves the conversation to time rather than results. For scoped work, quote the project fee and keep the internal rate internal.
How do I know if I'm charging too little?
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Every prospect says yes immediately, you're busy but not earning, and you feel resentful during delivery. Any one of those is a signal. All three at once means your price is well under the market and you should raise it on the next quote, not the next year.
How do I raise my rates without losing clients?
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Give notice in writing, 30 to 60 days ahead, state the new number plainly, and don't apologise or over-explain. Apply it to new work first if you have long commitments. Expect a small number of clients to leave — that is usually the intended outcome, not a failure.
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