How to Price Your Freelance Work (Without Guessing)

Most freelancers price by feel: a number that sounds respectable, adjusted downward when the client pauses. That works until you calculate what you actually earned and find it is below what the job you left was paying.

Pricing is two separate exercises. First, the floor — the number below which you lose money. Second, the price — what the work is worth to the client. The floor is arithmetic. The price is a judgement. Do the arithmetic first, because it changes how you make the judgement.

Step one: find your real hourly floor

The naive calculation divides a target salary by 2,080 hours. It is wrong in three ways, and each one is expensive.

Do it properly:

1. Start with what you need to earn, personally. Not what sounds nice — your actual annual cost of living plus what you want to save. Say $70,000.

2. Add business expenses. Software, hardware, insurance, accountant, coworking, courses. For most solo freelancers this is $6,000 to $12,000. Use $8,000.

3. Add tax. As a freelancer you pay both halves of self-employment tax plus income tax. Depending on where you live, set aside 25 to 35 percent. Take 30 percent, so the required gross is roughly ($70,000 + $8,000) ÷ 0.7 = $111,400.

4. Now the number everyone gets wrong — billable hours. You do not bill 40 hours a week. You bill somewhere between 20 and 25. The rest goes to sales calls, proposals, admin, invoicing, marketing, learning and email. Assume 22 billable hours a week.

5. Subtract time off. Holiday, sick days, public holidays, the week the laptop died. Assume 6 weeks off, so 46 working weeks.

The maths:

• Billable hours per year: 22 × 46 = 1,012 hours
• Required hourly floor: $111,400 ÷ 1,012 = $110 per hour

That is the floor for a $70,000 take-home. Not the target — the floor. Below it you are subsidising the client with your savings.

Two things usually happen when people run this the first time. They discover their current rate is roughly half their floor, and they discover the culprit is the billable-hours assumption. Everyone plans as though they bill 40 hours. Nobody bills 40 hours.

Step two: stop selling hours

Once you know your floor, stop quoting it directly. Hourly pricing has a structural flaw: the faster and better you get, the less you earn for the same result. You are being paid for inefficiency and calling it fairness.

Worse, it makes the client's job to police your time, which is a terrible relationship. Every email becomes a cost.

Price the project. The estimate still uses your floor internally — you just do not show it.

How to price a project

1. Estimate the hours honestly. Include revisions, meetings, admin and the round of feedback you always forget. Take your first estimate and add 30 percent, because your first estimate is always optimistic.
2. Multiply by your floor. That is the cost baseline.
3. Then ask what the outcome is worth. A landing page that lifts conversion by 1 percent for a business doing $2 million a year is worth considerably more than 20 hours of work. This is where price separates from cost.
4. Add a risk premium where risk exists. Vague brief, many stakeholders, an unmovable deadline. 20 to 50 percent, and you may simply decline instead.
5. Round up to a confident number. $4,800 not $4,750. Precision on an estimate implies false accuracy.

The three-tier proposal

Send three options, not one price. It moves the conversation from "yes or no" to "which one," and it lets the client choose scope instead of negotiating your rate.

• Essential — the core deliverable, tight scope, fastest timeline. Roughly 60 percent of the middle price.
• Recommended — what you actually think they need. This is your target, and you say plainly that it is your recommendation.
• Complete — the recommended tier plus the things that extend results: extra variants, a follow-up review, training, a support window. 60 to 100 percent above the middle.

Most clients choose the middle. A meaningful minority choose the top, and those are the projects that lift your year. Almost nobody asks for a discount when they are already choosing between three prices you set.

The conversations that decide the number

Ask about budget early, plainly. "Do you have a budget range in mind for this?" If they say no, give one yourself: "Projects like this usually land between $4,000 and $9,000 depending on scope — does that fit?" You lose fifteen minutes instead of two hours writing a proposal for someone with $800.

Never quote on the call. "Let me put together two or three options and send them over tomorrow." Numbers said out loud under pressure are always low.

Say the price and stop talking. The most common error is quoting and immediately justifying, discounting or apologising in the same breath. Say the number. Let the silence sit. It is not aggression, it is normal commerce.

When they say it is too expensive, reduce scope, not price. "I can bring it to $3,200 by dropping the second concept and one revision round." Discounting for the same work teaches every future client that your first number is decorative.

Raising your rates

Most freelancers wait too long, then attempt a 60 percent jump and panic.

• New clients get the new rate immediately. No announcement, no explanation. This is the easiest lever and it costs nothing.
• Existing clients get 30 days' notice and one sentence of context. "From 1 April my project rate for new work is $X. Everything currently in progress stays at the agreed price." That is the whole message. No apology, no essay.
• Raise 10 to 20 percent at a time, once or twice a year, rather than one dramatic correction.
• Expect to lose one or two. That is the point. If nobody ever declines, you are underpriced. Losing your lowest-paying client while raising everyone else is a good trade, and it frees the capacity that made you feel busy.

Three signals you are underpriced

1. Everyone says yes immediately. A healthy close rate on considered proposals is somewhere around 50 to 70 percent. At 100 percent you are leaving money on the table.
2. You are fully booked and still stressed about money. Capacity is full, which means volume cannot be the fix. Only price can.
3. You resent the work. Resentment is usually a pricing signal wearing an emotional costume. Work priced properly is much easier to be generous about.

Do the arithmetic today

Take twenty minutes. Write down your living costs, your business expenses, your tax rate, and an honest billable-hours number. Divide. Whatever comes out is your floor.

Then look at your last three projects and calculate what you actually earned per hour. For most people that comparison is uncomfortable — and it is also the fastest route to a rate change that sticks, because it is not confidence, it is a number.