How much should a freelancer charge? A simple way to find your rate

Ask a new freelancer how they set their rate and the honest answer is usually: they guessed. They took what they earned in a salaried job, divided by roughly two thousand working hours, and quoted that. It feels reasonable. It's also how a lot of people end up working harder than they ever did as an employee for less money — because an hourly rate and a take-home wage are not the same number, and the gap between them is enormous.

Here's a simple, honest way to find a rate that actually leaves you paid.

Why hourly is not take-home

When you were employed, someone quietly handled a pile of costs on your behalf: payroll taxes, paid holidays, sick days, equipment, software, the hours spent in meetings that weren't billed to anyone. As a freelancer, all of that is now yours. Every one of those costs comes out of the rate you charge — so the rate has to be much higher than an equivalent salary just to break even, let alone come out ahead.

The single most useful thing to internalise: the money on your invoice is not your money. A large slice of it is spoken for before it ever reaches you. If you price as though the invoice is your income, you're quietly funding your own business out of a wage you haven't accounted for.

Work backwards from what you need

Don't start from an hourly rate and hope it adds up. Start from the number you actually want to take home in a year, and work backwards to the rate that produces it. The logic runs in reverse: decide your target income, add everything that eats into it, then divide by the hours you can genuinely bill.

• Start with your target take-home for the year — the number you want to keep.
• Add your business expenses: software, hardware, subscriptions, insurance, accounting.
• Add the tax you'll owe on top — as a freelancer this includes self-employment or equivalent taxes an employer used to cover.
• Divide by your real billable hours, not the hours you're awake. That gives the rate.

Billable hours are fewer than you think

This is where most rates quietly break. A year has roughly two thousand working hours, but you cannot bill anywhere near all of them. Take out holidays, sick days, and the days you simply don't have work lined up. Then take out the unbilled work that runs every business: sales calls, proposals, invoicing, admin, marketing, learning, email. For many freelancers, only half to two-thirds of their working hours are actually billable.

That matters enormously, because you have to recover your entire yearly income from those billable hours alone. If half your time is unpaid overhead, your billable rate has to be roughly double what it would be if every hour counted. Freelancers who forget this are the ones perpetually busy and perpetually broke.

Then add fees, and a buffer

Two more subtractions people forget. First, platform and payment fees: if you work through a marketplace, it may take a real percentage off the top, and payment processors take their cut too. A rate that ignores a fifteen or twenty percent platform fee is a rate that's quietly wrong. Second, a buffer. Estimates run over, clients pay late, scope creeps. A rate with no margin means every surprise comes out of your own pocket. Build in a cushion on purpose, before you need it.

Sanity-check against the market

Your calculation tells you what you need to charge. The market tells you what you can charge. When those two numbers are close, you have a business. When your needed rate lands far above what your field and experience level command, that's not a reason to despair — it's information. It usually means you need to lower your costs, raise your skills into higher-paying work, or find clients who pay better than a race-to-the-bottom marketplace. Benchmark against real rates for your discipline and seniority, and treat a big gap as a signal, not a verdict.

SoloRate does exactly this calculation for you: enter an income goal, your billable hours, expenses and buffer, and it back-solves the hourly rate you need after tax and platform fees — then shows you where every invoiced dollar actually goes. It runs entirely on your device, so your numbers stay yours. None of this is tax advice; for filing, talk to a professional. But for setting a rate you can live on, working backwards beats guessing every time.