How to Set Freelance Rates That Actually Pay Your Bills
Stop undervaluing yourself. Learn a simple formula to calculate your ideal hourly and project rates based on real costs.
Stop guessing. Start earning.
Setting your freelance rates is one of the hardest parts of going solo. Charge too little and you burn out. Charge too much — or so the fear goes — and you scare off clients.
The truth? Most freelancers undervalue themselves. Not because they're not good enough, but because they've never calculated what their time is actually worth.
The formula
Your rate should cover three things:
1. **Your desired income** — what you want to take home
2. **Your business costs** — tools, software, insurance, taxes
3. **Your non-billable time** — admin, marketing, meetings
Here's the simple math:
`(Desired Income + Overhead) ÷ Billable Hours = Hourly Rate`
Example
Say you want to make $80,000/year. Your overhead (software, internet, accountant) is $6,000. You take 4 weeks off and work 30 hours/week — but only 70% of that is billable.
Working weeks: 48
Total hours: 1,440
Billable hours: 1,008
**Rate = ($80,000 + $6,000) ÷ 1,008 = ~$85/hour**
Use our Rate Calculator to find your number in seconds.
3 tips to raise your rates
1. **Raise rates for existing clients gradually.** A 10-15% increase every 6-12 months is standard.
2. **Price by value, not by hour.** A project that takes you 2 hours but saves a client $10,000 is worth more than 2 hours of your hourly rate.
3. **Know your floor.** Once you've done the math above, you know your minimum. Never go below it.
The bottom line
Your rates reflect your confidence. Do the math, set a fair price, and communicate it clearly. The clients who respect your work will respect your rate.