Most freelancers set freelance rates by looking sideways — checking what someone in a group chat charges, adding a little, and hoping it holds up. That produces a number with no relationship to what your life and your business actually cost. The reliable method runs the other direction. Start with the money you need to keep, add everything the business consumes, divide by the hours you can honestly sell, and treat the result as a floor you refuse to go under.<\/p>\n
This is arithmetic, not confidence. You can finish it in about thirty minutes with a spreadsheet and last year’s bank statements.<\/p>\n
A full-time year looks like 40 hours a week across 52 weeks, or 2,080 hours. Nobody bills that. Take out three weeks of vacation, a week of public holidays, and a week you lose to illness or family, and you are down to roughly 1,880 working hours before a single invoice exists.<\/p>\n
Then subtract the work nobody pays for directly:<\/p>\n
Run a two-week time log before you trust your instinct here. Most solo service providers land somewhere between 50% and 65% billable when they measure honestly, which puts real capacity around 950 to 1,200 hours a year. Use 1,000 as a working number until your own log says otherwise.<\/p>\n
That single correction changes everything. Dividing your income target by 2,080 instead of 1,000 makes your rate look half as large as it needs to be, and you won’t notice until the year is over.<\/p>\n
Overhead is not just your laptop. Pull twelve months of business bank and card statements and categorize every line. A typical solo consultant’s annual list looks something like this:<\/p>\n
That is $9,500 a year, or nearly $10 per billable hour at 1,000 hours — before you have earned a dollar for yourself.<\/p>\n
Two categories get missed constantly. First, self-employment and income taxes: as a freelancer you cover the full payroll tax burden, so a set-aside somewhere in the 25–35% range of profit is common. Confirm your own bracket with a tax professional rather than guessing. Second, benefits an employer would have handled: your own retirement contributions, health premiums you pay yourself, and paid time off. If those aren’t inside your income target, you are quietly funding them out of a salary you already decided was enough.<\/p>\n
Now add a buffer of 10–15% for scope creep, rework you can’t bill, and the occasional invoice that never gets paid. That takes the example to roughly $120 an hour.<\/p>\n
That $120 is a floor, not a price. It is the number below which taking the job costs you money. If a prospect’s budget implies $75 an hour, you already know the answer without negotiating with yourself at midnight.<\/p>\n
Most clients don’t want to buy hours, and hourly billing punishes you for getting faster. Use the floor rate as the input to a fixed price instead.<\/p>\n
Estimate the hours the project genuinely takes, including revisions and calls. Multiply by your floor rate. Then apply a risk multiplier: 1.0 for work you have done twenty times with a clear brief, 1.25 for a new client or an unfamiliar stack, 1.5 when the scope is vague or several stakeholders must approve. A 30-hour build at $120 with a new client becomes 30 × 120 × 1.25 = $4,500, not „about four grand.“<\/p>\n
Three rules keep the number intact. Set a minimum engagement so small jobs can’t eat a week for $600. Take 40–50% up front and bill the rest on delivery, not net-45. And define revisions explicitly — two rounds included, additional rounds at a stated hourly figure — because unbilled revisions are where margin quietly disappears.<\/p>\n
If you also sell templates, courses, or other non-hourly offers, the logic shifts from cost recovery to volume and positioning; our guide on how to price a digital product<\/a> walks through that separately. For service work, the Price & Margin Reset Planner<\/a> runs this floor-rate and margin math in a 13-sheet Excel model with 267 formulas, alongside an 8-page start-here guide.<\/p>\n Existing clients are usually the ones furthest below your floor, because they were priced when you knew less. Fixing that is a process, not a confrontation.<\/p>\n Starting March 1, my rate for this work moves to $120 per hour. Your current retainer covers 10 hours a month, so the monthly total becomes $1,200. Everything else stays the same, and I’m glad to keep working together. If you’d prefer to hold the current budget, we can drop to 8 hours a month instead — just tell me which you’d like.<\/p>\n<\/blockquote>\n Expect some churn and plan for it. Losing a client who paid below your floor frees the hours that were subsidizing them. If you keep every single client after a raise, the increase was probably too small.<\/p>\n Sometimes the floor comes out at a number your market visibly won’t pay. Don’t quietly discount back to the old rate. Change one of the inputs deliberately.<\/p>\n Fix the hours before the price.<\/strong> Going from 800 to 1,000 billable hours drops the required rate by roughly 20% with no negotiation at all. Batch admin into one block a week, template your proposals, and stop rebuilding the same onboarding email.<\/p>\n Cut overhead that isn’t earning.<\/strong> Cancel the subscriptions you opened for one project. Every $1,000 removed takes about a dollar off your hourly floor.<\/p>\n Change what you sell, not just what you charge.<\/strong> Move from one-off tasks to retainers or packaged outcomes, where the buyer compares your price to a result instead of to an hourly market rate.<\/p>\n Collect what you already earned.<\/strong> Unpaid and written-off invoices are a rate cut you never agreed to. Tighten deposits, add late fees to your contract, and follow up on day one past due.<\/p>\n If none of those levers close the gap, you are selling to the wrong segment. That is a positioning problem, and no pricing formula will solve it for you.<\/p>\n If you want the calculation already built — billable-hour capacity, overhead allocation, floor rate, and margin by service line — the Price & Margin Reset Planner<\/a> is the place to start. You can also browse the full Cursiqa workbook shop<\/a> if cash flow or your client pipeline is the tighter constraint right now.<\/p>","protected":false},"excerpt":{"rendered":" A cost-first method for pricing freelance work: real billable hours, the overhead everyone forgets, a floor rate formula with a worked example, and a script for raising rates.<\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[33],"tags":[70,69],"class_list":["post-339","post","type-post","status-publish","format-standard","hentry","category-business-productivity","tag-freelance-pricing","tag-set-freelance-rates"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\tHow to Raise Rates With Existing Clients<\/h2>\n
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What to Do When You Set Freelance Rates and Nobody Says Yes<\/h2>\n