How to set your freelance hourly rate

Decide how much you want to take home in a year, then add your business expenses and an allowance for tax. That total is what your work needs to earn.

Do not forget costs an employer would cover for you: equipment, software, insurance, retirement savings and time off.

You cannot bill every working hour. Finding clients, sending invoices, answering emails and learning new skills take time, so many freelancers bill 50–70% of the hours they work.

Also remove holidays, sick days and quiet periods. If you work 30 billable hours a week for 46 weeks, that is 1,380 billable hours a year.

Divide the income you need by your billable hours. To earn 69,000 including expenses and tax, 1,380 billable hours means a rate of 50 per hour.

Compare the result with market rates for your skills and region. If it is far above them, you can reduce expenses, raise your skills or specialise. If it is well below, you may be undercharging.

For fixed-price work, estimate the hours, add a buffer for revisions, multiply by your rate and add project expenses. Keep track of the real hours so your next estimate improves.

Review each client afterwards. A client who takes twice the time you expected may be less profitable than a smaller one who pays on time.