Calculate Hourly Rate as a Freelancer

Calculate Hourly Rate as a Freelancer

A freelance job is not as easy as you think. Freelancers work for themselves and take all responsibilities they don’t have any connection with other’s companies. They are self-employed personnel who take on contract work for companies and organizations.

To become a successful freelancer, you have to take on all the responsibilities like setting your work hours, keeping track of time spent on different projects, billing and invoicing clients, and paying your own employment and business taxes. So, the freelancers are not considered as employees but rather as a contractor.

How Freelancers Get Paid?

If you get paid in a time, your business will automatically succeed.

Freelancers, small businesses, and large businesses all need the payment for smooth running for their business. But when it comes to freelancers, getting paid is quite difficult. The freelancers have to manage everything on their own. So the professional invoices play an important role in getting faster payment.

The clients tend to pay faster if they trust the invoices, so you must send professional-looking invoices to them.

How to Calculate Hourly Rate as a Freelancer?

As a freelancer, everything becomes a hassle, and you have to manage the capital, invoices, and other expenses by yourself. When you work as a full-time employee, there is much more benefit that comes into consideration for taxes you don’t have to pay.

When starting a career as a freelancer, it is known that everyone doesn’t have any idea about the charge for a project. There are many things to consider, like how much you should charge as a freelancer.

Determining the best way of charging an hourly rate as a freelancer is the biggest challenge. You may start charging too much or too little, and both are an extreme impact on your freelance career.

The simplest way of calculating the hourly rate is:

  • First, decide how much do you want to make money/month
  • Secondly, look as market prospectus how others are charging

When you have to decide how much you want to charge for the services, and avoid other pricing schemes, build your own according to your requirement and experience.

Now you have decided that you should start charging an hourly rate,

  • In that case, if you overcharge, you may lose the client, who’ll look for other freelancers, who offer the same quality work, but at a lower price.
  • And if you undercharge, then you may end up not making any profits, and all hard work might get considered.

calculate hourly rate as a freelancer

Different Methods and Factors While Fixing your Hourly Rate

1. Analyze before Fixing Hourly Rate

When as a Freelancer, you start calculating the hourly rate, plan everything before it. In this running cost, all of your earnings will also need to cover other costs. Must include additional illness and holidays, social and health insurance, pay taxes, and payment to private pension plans. You must add 25% extra of your annual salary because your employees pay your taxes at the time of working. As a freelancer, you are responsible for these costs.

Your earning depends on the number of clients, and you must finalize the payment regarding deals. You can’t suddenly raise your fees if you are still doing the same work.

2. Project Selection for Freelancing Businesses

Not every project you get an offer is the best job. Even though the client gives enough money, this might be misleading. In such care, take time and decide if you are qualified enough. Consider the big picture because you will spend more time on the project that you have already aware of. It helps you to get a good amount of profit.

Make sure that you must not undercharge, Make a conscious decision to be self-employed so that you don’t want to get paid less than the average employed person.
Calculate the rate hour, which is still to be low for you because, as mentioned above, you have additional costs to cover, and you don’t have an employer who takes care of them.

3. Manage Profit and Risks Factors

You want to make enough profit from the freelancing career, and it doesn’t mean that you can cover all your expenses. Because you don’t have the same number of projects every month. So be prepared for future expenses, start saving or reserving in case things don’t go well.

Life is unpredictable, accidents may occur, and you can’t work for a long period. As a freelancer, the hourly rate varies over time with certain kinds of risk factors. You can’t get sick pay from the employee, because you are a self-employed person.

All the required digital assets like laptops, mobiles, printers, and internet bills are managed by yourself. You have to repair or replace it; without the profits or budgeted reserve, it might be difficult to pay for repair or replacement.

4. Calculate Total Working Day

Doing freelancing, you have the freedom to work at any time. That doesn’t mean you will work all long, 365 days a year. If you minimized the public holidays by nearly between 11-19 days depends upon which country are you from, also 104 weekends that must be deducted from the years and employee have allowance up to 28 days of holidays and some sick leaves holidays.

In total, you have remaining overall 220 days of working per year that is only nearly 18 days of a month. Suddenly, the working days seem to be lower if you put your hourly rate too low, then it will be a hassle to manage all the expenses.

In working, there may be unproductive time; when you are not doing so great in freelancing, you have to take care of all the invoices and find new projects and prepare for the client meetings. Those things are really important for your job, but you don’t get paid for them. Unproductive time is also part of your daily work, and you must have to handle those things.

Ultimately, you have to consider many factors while estimating the hourly rate. When you are a freelancer, you don’t have an employee, so you have to wear many hats, like dealing with clients, managing accounts, all other expenses. You have to prepare for all kinds of risk factors. Also, have a proper working plan; you can’t work 365 days a year. Make some plans for the break and unproductive time while calculating the fees.

5. Calculate Your Hourly Rate

The best way to figure out an hourly rate for a freelancer is to calculate the salary you want by the number of hours worked each year.

Suppose you get $70,000 per year, and we have 52 weeks in a year.

We know that 40 hours/week x 52 weeks/year = 2080 hours.
And $70,000 per/year / 2080 hours = nearly $34 per hour

This calculation would give the estimated results. If you started charging $34 per hour soon, you find any problems regarding finance. You have deals with extra house coverage and software services charges.

6. Dealing with Extra Expenses

While estimating the hourly rate make sure all expenses you should manage while working as a freelancer. Working as a freelancer consider a taught job for a living because freelancers have to manage many things by themself.

For freelancing, you have many expenses to handle regarding living costs, software purchases, Computer PCs, Laptop mobile, Internet bills, Project Management tools, Servers Cost(hosting), working space and coworkers, etc.

Considering the average expenses of a freelancer over one year. We estimate these data…

Office Space/Coworking Members = $ 4100/year
Web Hosting = $560/year
Internet Bills = $ 900/year
Invoice Account Software = $ 360/year
Project Management Tools = $45/year
Phone = $ 850
New Laptop every two years = $ 1200
Promotion and Marketing = $1350
Misc Software Allowance for uncollected payments =$450
Accountant fees/ Tax Preparations = $340

Cost of living = $2000 (included utilities, travel expenses self-promotion,)
Healthcare cost = $5600
Self-employment tax = $6000

Hence Total expenses = $21,755

Your annual salary = $70,000
New Overall Expenses = $21,755

The Actual Adjustable Salary = $91,755

7. Manages Unproductive Days and Profits

While working as a freelancer, you can’t work with 100% productivity, and you also have multiple tasks to do that don’t get you paid. If you assume you will be 80% productive and your wording day is reduced to 14 days a month from 18 days of a month, you might work on projects for the clients on those days. That means you have to increase your working hourly rate, but that is not the only thing you must need to make a good profit too! You must add at least 10% profit to your income.

The Estimated calculation:

Annual salary = $91,755
Number working days in a year = 12 months X 14 days in a month = 168 days.
Number of hours to work in a year = 168 days X 8 hour a day = 1344 hours

Now we have to calculate the hourly rate,

Hourly rate = Annual overall salary/number of working hours
= $91,755 / 1344 hour = $68 / hour

It is not the final hourly rate; you have to add 10% profit on it,

So, 10 % profit of $68 = ~$7

Now the final Value is $7 + $68 = $75 / hour

You must have to charge $75 per hour if the condition mentioned above satisfies your requirements. The above data are just estimated data you can calculate according to your requirement and the country you live in.

If you find that your hourly rate is not enough for your living standard, you can increase or decrease accordingly. One thing more doesn’t sell your time and services less than it is worth it. Also, don’t take any project that came to you. First of all, decide and analyze that you can do it. It’s never worth it unless you make a profit.

8. Other Things that Help you to Estimate Hourly Rate

While figuring out your freelancing hourly rate, also make sure there are markets outside where many freelancers are on the line; they offer minimum rates. It is important to keep up to date with the industry and make positive contacts with other freelancers in the market; never isolate yourself from what is happening in the current industry, both local and global marketplace.

You have to always investigate what others are charging and what services they are providing a similar client on the same projects. That helps you to estimate your hourly rate and win over all the customers/clients.

You can find these kinds of information online. You must keep searching and searching, then only you will get the projects. And also, ask potential clients that you know those people who have recently completed their projects like the one you want to work with.

Always seek the people who help you in the freelancing industry. And much research about the average salary information.

9. Always Think about Value, Not Time

As a freelance, you must give value to the company instead of charging for time. Always start thinking in terms of the offer you should provide. Your rate is just a reflection of your values for the clients and your competitors’ value.

Take a frame in mind to see the rate calculator based on the expected earnings divided by time. Never take into account the value you provide to your client. Always provide value-based pricing.

If you have more than five years of experience in the field and have new skills along the way, but the cost of living is the same, then you can’t charge hourly at the same rate you charge earlier. You have to increase the hourly rate according to your experience and skillsets.

If you have learned many things to work as a freelancer and develop many skill sets, and now can do the same work twice as fast as you could before, you must compensate for that by doubling your rate.

The rate calculator does not include your speed of work, quality of work performance, and skills, experience, professionalism, efforts, where these things have a large contribution to your hourly rate.

10. How to Manage Your Rate Over Time?

The answer is simple: to increase your freelance hourly rate with an increase in your value over time. Always gain more experience, try new skill sets, polish your soft skills, compete with others in the market.

Perform better day by day to beat your competitor? Charge more than usual because more experience allows you to come up with the right solution. Raise your rate accordingly to experience that directly contributes to a better outcome for the clients because your efficiency helps them save some money.

11. Search for Freelancers from Your Field

Don’t compare yourself to anyone you are perfect just the way you are. But while it comes to freelance billing hour, find what others are charging that helps you to finalize your billing hour.

Start searching online about what other freelancers are doing what you are doing and get some meaningful information about their charging technique.

Join multiple Facebook groups, professional organizations, go for discussion forms, attain conferences and find your tribe. Get together with a small group of people like-minded freelancers to honestly talk about the projects, software, technologies, and pricing. In that talk, you can be more open towards the money and business matter about freelancing.

From that experience, you can adjust your freelancing hourly charge. The value you bring to the table must be considered while you’re pricing the freelance hourly rate.

12. Hourly Rate According to the Field You Work as a Freelancer

There are many things to do in the freelancing field, like Web Development, App Designing, Graphic Designing, Content Marketing, Digital Marketing, SEO, SMO, etc.

These are the freelancers’ core fields where they can make plenty of money while working as freelancers. One best part of freelancers they can work from anywhere as they are comfortable.

In freelancing, you have various options in which field you want to work and choose those fields you feel comfortable with and have good knowledge. And decide the hourly rate according to the field you are working in.


As above, there are many ways to charge hourly as a freelancer and find better clients. Freelancers must have to research themself and analyze the requirement of their expenses.

While declaring a freelancing hourly rate, first do some math about all the expenses and taxes and only then finalized the rate because it’s the freelancer who gives time and efforts to that project which you get paid off.

As freelancers have to manage all aspects of their business, invoicing software like OutInvoice can play an important role to make the work efficient. OutInvoice offers many features that are best suited for freelancers and small business owners. Freelancers can manage multiple businesses, send invoices faster, accept online payments, track invoices and get reports of every transaction.

Make a wise decision while working as a freelancer. Hope you have found your answer that how to calculate the hourly rate as a freelancer in this article.

While working as a freelance, never work for free at any cost because freelancers always get a good amount of money while working for the client. Congrats on charging freelancer worth and get it as long as your price for the services you work on.

Charge your freelancing hourly rate according to your expenses, profits, and consider the quality of life in the account, and then your freelancing career will run smoothly.

Emily Hedge is a writer from Sydney, a tech enthusiast, and a blogger who loves to writes about technology news, developments, and trends with insightful analysis and commentary.

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