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Pricing your work

Going freelance but don’t know what to charge? Find out how to calculate your hourly rate

Knowing what to charge for your work can be quite an awkward area for the new freelancer.

Up until now you have not had to think too much about the value of what you do. You just turned up at work, did the hours and got a fat (or not so fat) pay cheque at the end of the month.

Your employer was the one who knew the price to charge for services, and how much your contribution was worth to them. Now you are in that situation. People will often call freelancers up and ask ‘what are your rates?' It's a straightforward enough question, but the answer is not actually that simple. Many freelancers will charge different rates for different jobs for the simple reason that not all jobs are the same.

In this sense, it can be hard to have a set rate. However, clients will often need a ball park figure, so you should do some research into how much you are going to charge and what the market can bear.

How to calculate an hourly rate

Your rates should reflect what it costs you to be in business. Anyone selling time and knowledge as a service can calculate their costs. The first step is to determine what it will cost you to be in, and run, the business. Don't underestimate the full costs of starting up and maintaining a business. Remember to include all your costs, including ongoing expenses and fresh investments in equipment. Your main costs are:

  • business and office expenses
  • salary and tax
  • benefits.

Business and office expenses

You'll need an office, even if it's in your home. Ongoing recurring expenses will include phone and utility bills, postage, broadband and web hosting, copying, office supplies, memberships, subscriptions, travel and professional services such as accountancy. You will also have to invest in office equipment and furniture, computer purchases and upgrades, filing cabinets, a desk and so on.

Salary and tax

Plan to earn more or less what you'd get as a full-time employee, otherwise being an employee may be less stressful. Don't forget that you are now responsible for your own tax affairs and you must put a relevant sum aside from your income. It is a good idea to open a separate account for your tax. With online banking this is very simple, and you can put aside the money in an interest bearing account of some type. This way, even though the taxman is getting their slice, you are making the money work for you while it's resting in your account


This could include such items as pension, insurance and holiday pay that you will now have to fund. By adding these three items together you will arrive at a figure that represents your cost of being in business for the year. Next, calculate your billable time. First, work out how many hours you will be able to work. This needs to take account of all the down time that you will not be able to charge for:

  • holidays
  • sick days off
  • time without work
  • unpaid work time such as personal admin or marketing.

Try to come up with a realistic number of hours you can expect to charge for, for example 1,500 hours across the year. Divide your total cost for the year by the number of hours to come up with an hourly rate. With this hourly rate, you can calculate a daily and weekly rate. It is worth asking around to see if this is realistic. If the consensus is that you are being a bit optimistic, you will either have to revisit your salary expectations, look at ways of cutting costs, or think again about the type of work you are pursuing. If your hourly rate seems too low then raise it until you feel comfortable with it. If you are surprisingly popular and never seem to be without work, it could be time to rethink your hourly rate. On the other hand, if clients are put off by your hourly rate, then you could consider lowering it. Freelancing is a marathon, not a sprint, and sometimes it can pay off to play the long game and accept a lower rate in the hope of future benefit: for example, if you think a client will be a good source of work in future, or a project will give you valuable experience. Going Freelance, published by Crimson publishing, is available on Amazon now.


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