Most freelancers set their rate by looking at what other people charge and knocking a bit off. The problem: you have no idea what those people spend, how many hours they bill, or whether they are going broke. Your rate should start from your numbers. The market tells you where you can go from there.
This guide gives you a formula you can run in two minutes. If you would rather skip the maths, use our free freelance rate calculator.
The formula
Three inputs matter, and freelancers usually get the last one wrong.
1. Target income
What you want to take home before tax, the same way you would think about a salary. Include what an employer would normally cover for you: retirement savings, health insurance, and paid time off.
2. Business expenses
Everything you pay to run the business for a year: software subscriptions, hardware replacement, internet, coworking, courses, accountant fees, and platform fees. Upwork, for example, now takes a variable 0 to 15% fee from freelancers, which is a real cost if most of your work comes from there.
3. Billable hours (the one people overestimate)
You will not bill 40 hours a week. A big share of your time goes to finding clients, writing proposals, invoicing, admin, and learning. A realistic starting point:
- 52 weeks minus holidays, vacation, and sick days ≈ 46 working weeks
- Around 50 to 60% of a 40-hour week is billable ≈ 20 to 24 hours
- 46 weeks × 22 hours ≈ 1,012 billable hours a year
If you track your time for a month, you will know your real number. Use that instead of the estimate.
A worked example
Say you are a freelance designer who wants a $60,000 income, spends $6,000 a year on the business, and sets aside 28% for taxes.
| Step | Calculation | Result |
|---|---|---|
| Income + expenses | $60,000 + $6,000 | $66,000 |
| Add taxes (28%) | $66,000 ÷ 0.72 | $91,667 |
| Billable hours | 46 weeks × 22 hours | 1,012 hours |
| Minimum rate | $91,667 ÷ 1,012 | ≈ $90 / hour |
That $90 is a floor, not a target. Charge less and you are paying to work. Your actual rate should sit above it once you factor in experience, niche, and demand.
Compare your number with the 2026 market
Once you have your floor, sanity-check it against what clients are paying. Published 2026 rate guides land roughly here:
| Role | Beginner | Mid-level | Senior / specialist |
|---|---|---|---|
| Graphic designer | $35–60/hr | $65–110/hr | $120–200+/hr |
| Web developer | $25–50/hr | $50–95/hr | $95–160/hr |
Rates vary a lot by country and specialization. If your minimum is above the range for your level, you have three levers: cut expenses, raise billable hours, or move into a niche that pays more (for example, brand identity instead of one-off social posts).
Turning an hourly rate into a project price
Clients usually prefer a fixed price, and project pricing lets you earn more as you get faster. Convert your rate like this:
- 1Estimate the hours for each phase of the project (discovery, drafts, revisions, delivery).
- 2Multiply by your hourly rate.
- 3Add a 15 to 25% buffer for feedback rounds and communication you did not plan for.
- 4Write the number of revision rounds into your agreement so the buffer is not eaten by scope creep.
Example: a logo project estimated at 14 hours × $90 = $1,260, plus a 20% buffer = $1,512, which you might present as $1,500 with two revision rounds included.
When to raise your rate
- You are booked out for more than a month ahead.
- Clients say yes to your quote without any pushback.
- Your time tracking shows projects consistently take fewer hours than you quote.
- It has been a year since your last increase.
An increase of around 8 to 15% a year, with 30 to 60 days of notice, is a common, low-drama way to do it for existing clients. New clients simply get the new rate.
Frequently asked questions
How do I calculate my freelance hourly rate?
Add your target income and yearly business expenses, divide by one minus your tax rate, then divide by your realistic billable hours per year (often around 1,000). The result is your minimum hourly rate.
How many billable hours does a freelancer work per year?
Many freelancers bill 20 to 25 hours a week because the rest goes to admin, sales, and learning. Across about 46 working weeks that is roughly 900 to 1,150 billable hours a year.
Should I charge hourly or per project?
Use your hourly rate to calculate prices, but quote fixed project prices when the scope is clear. Clients find them easier to approve, and you earn more as you get faster.