Home › Guides › Freelance pricing
How to Set Your Freelance Rate (Without Guessing)
The short answer: work backward from what you want to take home. Add your yearly business expenses, gross it up for taxes, then divide by the hours you can actually bill, not the hours you work.
Example: to take home $60,000 a year, most freelancers need to charge about $73 an hour, not the $29 you get by dividing $60,000 by 2,080 hours.
The freelance rate formula
Most freelancers set their rate by looking at what others charge. That tells you what clients might pay, not what you need to earn. Start with your own numbers instead. There are five inputs:
- Your take-home goal. What you want to keep for the year, after taxes and expenses. Think of it as your salary.
- Your business expenses. Software, equipment, health insurance, phone, internet, coworking, accounting and platform fees.
- Your tax rate. As a freelancer you pay income tax plus self-employment tax. Many US freelancers set aside 25–30% of revenue.
- Weeks you'll work. 52 minus vacation, holidays and sick days. Nobody pays you for those weeks.
- Billable share of your time. The part of your working hours a client actually pays for. Usually 60–70%.
Put them together:
The first half tells you the revenue you need. The second half tells you the hours you can sell. Divide one by the other and you have your minimum rate.
Freelance rate calculator
Change any number and your rate updates instantly. The defaults match the worked example below.
A worked example
Say you're a freelance designer who wants to take home $60,000 a year. Here's the math, step by step:
| Step | Amount |
|---|---|
| Take-home goal | $60,000 |
| + Business expenses | $6,000 |
| = Needed after taxes | $66,000 |
| ÷ (1 − 28% tax set-aside) | ÷ 0.72 |
| Revenue needed per year | $91,667 |
| Working weeks (52 − 4 off) | 48 |
| × 40 hours × 65% billable | 1,248 hours |
| Minimum hourly rate ($91,667 ÷ 1,248) | $73.45 |
Round up when you quote it: $75 an hour, or a day rate of about $600. That's the least you can charge and still reach your goal. It's a floor, not a target.
Why salary ÷ 2,080 undercharges you
The most common shortcut is to take a salary and divide it by 2,080, the hours in a full-time year. A $60,000 salary becomes $28.85 an hour. Charge that as a freelancer and you'll fall far short, for four reasons:
- You pay both halves of payroll tax. An employer pays 7.65% on top of your salary for Social Security and Medicare. As a freelancer, you pay the full 15.3%.
- Nobody pays for your time off. Vacation, holidays and sick days come out of your billable year.
- You pay for your own tools and benefits. Health insurance, retirement contributions, software and equipment are now your costs.
- Not every hour is billable. Finding clients, writing proposals, sending invoices and doing your books all take time no one pays for.
Leaving a job? Compare your current salary and benefits with the salary to freelance rate calculator. The equivalent freelance rate is often about double the salary's hourly figure, or more once benefits are counted. The full method is in salary to freelance rate.
How many hours you can really bill
A 40-hour week rarely means 40 billable hours. Freelancers typically bill 60–70% of their working time. The rest goes to:
- Finding work: pitching, proposals, networking and your portfolio
- Client communication that isn't billed: calls, emails, revisions outside scope
- Admin: invoicing, chasing payments, bookkeeping, taxes
- Learning new skills and tools
Early on, when you're still building a client list, 50% is a safer assumption. As repeat clients and referrals grow, your billable share usually rises, and your effective income rises with it even at the same rate.
How taxes change your rate
Taxes are the biggest reason freelance rates have to be higher than salaries. In the US, a freelancer pays:
- Self-employment tax of 15.3% for Social Security and Medicare, charged on 92.35% of your net profit. The Social Security part applies to the first $184,500 of earnings in 2026.
- Federal income tax at your bracket, after deductions. Half of your self-employment tax is deductible, and many freelancers can also deduct up to 20% of qualified business income.
- State income tax in most states.
That's why the formula grosses up your take-home goal by your tax rate. Set the money aside as you're paid, and pay it in quarterly estimates. See exactly what you'll owe with the self-employment tax calculator, and read how much to set aside for taxes.
General information for planning, not tax advice. Your situation may differ.
Your floor vs. what the market pays
The formula gives you a floor: the lowest rate that still meets your goals. What you actually charge also depends on the market:
- Check what others charge for similar work and experience: freelance marketplaces, industry rate surveys, and peers in your field.
- If the market pays more than your floor, charge market rate. Your floor is a minimum, not a ceiling.
- If the market pays less, don't just drop your price. Specialize in a niche or industry that pays more, sell outcomes instead of hours, or lower your costs.
Specialists usually earn more than generalists. "Brand designer for restaurants" can charge more than "graphic designer," because clients see less risk in hiring someone who's solved their exact problem before.
Hourly, day rate, project or retainer
Your hourly rate is the building block for every other way to price:
| Model | How to set it | Best when |
|---|---|---|
| Hourly | Your rate from the formula, rounded up | Scope is unclear or keeps changing |
| Day rate | Hourly rate × 8 (e.g. $75 × 8 = $600) | On-site or full-day engagements |
| Project | Estimated hours × rate + 15–25% buffer | You can estimate the work well |
| Retainer | Monthly hours × rate, paid up front each month | Ongoing work with the same client |
Project pricing example: a 20-hour website project at $75 an hour, with a 20% buffer for revisions, is 20 × $75 × 1.2 = $1,800. Ask for a 50% deposit before you start, and put the number of included revisions in writing. Try it with the project quote calculator.
Fixed prices reward speed. If you finish that project in 15 hours, you've earned $120 an hour. Go deeper with hourly vs. project pricing, how to price a freelance project, and how to calculate a day rate.
Tools that make pricing and getting paid easier
Send professional invoices, take card payments and send automatic reminders when clients pay late.
Try FreshBooks →Proposals, contracts and payments in one place, so a client can approve a quote and pay a deposit in one step.
Try HoneyBook →Some links on this page are affiliate links, which may earn us a commission at no extra cost to you. How we choose recommendations.
How to raise your rates
Review your rate at least once a year, and any time your calendar stays full for a few months. A full calendar is the market telling you your price is low.
- Raise rates for new clients first. Quote new inquiries at the higher rate right away.
- Give existing clients notice. 30 days is standard. Many freelancers keep current projects at the old rate and apply the new one at the next project or renewal.
- Keep the message short. No long justification needed.
More scripts, including a phased increase for long-term clients, are in how to raise your freelance rates.
Common pricing mistakes
- Pricing from a salary. Salary ÷ 2,080 ignores taxes, benefits, time off and unbilled hours.
- Assuming every hour is billable. Plan on 60–70%, or less while you're building a client base.
- Forgetting taxes until April. Set aside 25–30% of every payment as it comes in.
- Never raising rates. Costs rise every year. If your rate doesn't, your real income falls.
- Fixed prices without a buffer. Revisions and surprises eat into your profit. Build in 15–25%.
- Competing on price alone. The cheapest freelancer attracts the most price-sensitive clients. Compete on results instead.
FAQ
How much should a beginner freelancer charge?
Start with the same formula: your take-home goal plus expenses, divided by what's left after taxes, divided by your billable hours. That's your floor. Beginners often price a little below established competitors to win first clients, but don't go below your floor, or every project loses you money.
Should I charge hourly or per project?
Hourly works when the scope is unclear or keeps changing. Fixed project prices work better once you can estimate the work, because finishing faster raises your effective hourly rate. Many freelancers start hourly and move to project pricing as they learn how long their work takes.
How do I convert my salary to a freelance hourly rate?
Don't divide your salary by 2,080 hours. Add the value of your benefits, the extra 7.65% payroll tax your employer paid, and unpaid time off, then divide by the hours you can actually bill. The result is often about double your salary's hourly figure.
What percentage of my freelance income should I set aside for taxes?
Many US freelancers set aside 25–30% of every payment for federal and state income tax plus self-employment tax. Self-employment tax alone works out to about 14% of profit. Your exact number depends on your income, deductions and state.
How often should I raise my freelance rates?
Review your rate at least once a year, and whenever your schedule stays full for a few months. Give existing clients 30 days' notice. Many freelancers apply new rates to new clients right away and to existing clients at the next project or renewal.
Should I charge more for rush jobs?
Yes. A rush fee of 25–50% is common for work that has to bump other projects or be done on nights or weekends. Put it in writing before you start.
Sources: IRS: self-employment tax · 2026 Social Security wage base. General information for planning, not tax, legal or financial advice.