Charge too little and you work full weeks for part-time money. Copy someone else’s rate and the number has nothing to do with your costs. This guide gives you the rate formula, a worked example that turns an income goal into an hourly rate, and a three-rate framework for what to actually quote.
Search intent: you need a defensible price that covers your income, costs and tax on the hours you can really bill. That number is worked out in the first three sections, then tested against the market and turned into hourly, day and project quotes.
How much should you charge as a freelancer?
Charge at least the rate that covers your income goal, business costs and tax on the hours you can actually bill. For most full-time freelancers that means working out a floor rate from the formula below, then checking it against market benchmarks before you quote anyone.
That order matters. Your floor comes first because it is personal: it depends on your costs, your tax position and how much of your week clients will actually pay for. Market rates come second, as a check. If your floor sits inside the market range for your skill, you have a workable rate. If it sits above the range, discounting will not fix it: you need different clients, a narrower specialism or lower costs (framework below).
Guessing fails in both directions. Price below your floor and the shortfall repeats on every hour you sell. Price far above what your positioning supports and quotes go unanswered. A calculated floor separates those two problems, so you know which one you are solving.
What is the freelance rate formula?
The freelance rate formula is: revenue you need divided by billable hours you can sell. Revenue you need is your income goal plus business expenses plus a reserve for tax, pension and gaps, often estimated as a 30 percent uplift on your salary equivalent.
Hourly rate = (income goal + business expenses + tax and benefits reserve) ÷ billable hours per year
Each input does a specific job:
- Income goal. What you want to pay yourself for the year, before tax. Leaving a job? Use the salary you need to replace. Already freelancing? Use the take-home you need plus what you want to save.
- Business expenses. Your overhead: software, hardware, insurance, accounting, training, website, coworking and bank fees. List what you really spend in a year, not what you think you spend.
- Tax and benefits reserve. An employer funds pension contributions, paid holiday and sick cover, and pays employer taxes on top of salary. You fund all of it from your rate. The common shortcut is a 30 percent uplift on the salary equivalent. If you know your likely effective tax rate, replace the shortcut with your own figures.
- Billable hours. The hours a client will pay for in a year. This is never 40 hours a week for 52 weeks, and getting it wrong is the biggest pricing error, as the table below shows.
Run your own inputs through LancerBill’s freelance rate calculator, which builds the rate from income, expenses and billable hours in one pass. For the narrower hourly-only version, see our walkthrough on how to calculate your freelance hourly rate.
Tip: Keep your floor private. Clients never need to see it. It is the number you check every quote against before sending, so an attractive-looking project does not quietly pay below your minimum rate once the hours are honest.
Worked example: turning a fifty thousand pound income goal into an hourly rate
Assumptions, stated up front: you want to replace a £50,000 salary equivalent, you freelance full-time, and you use the standard 30 percent uplift as your reserve for tax, pension, holiday cover and business costs. You plan 25 billable hours a week for 48 weeks. The currency is pounds, but the arithmetic is identical in any currency.
Step 1: set the income goal. £50,000, the salary equivalent your freelancing needs to stand in for.
Step 2: add the reserve. £50,000 × 30% = £15,000. Add it on: £50,000 + £15,000 = £65,000 of annual revenue your rates need to produce. That £15,000 is not profit. It pays your tax bill, pension, software, insurance and income during holiday and gaps between projects, none of which an employer funds any more.
Step 3: count billable hours honestly. 25 billable hours a week × 48 working weeks = 1,200 billable hours a year. The 48 weeks allow four weeks for holiday, sickness and quiet spells. The 25 hours allow for the admin, proposals, marketing and invoicing that fill the rest of a 40-hour week and that nobody pays you for directly.
Step 4: divide. £65,000 ÷ 1,200 = £54.17 an hour. Round it to a clean quote figure: £55 an hour. That is your floor. Below £55, this plan does not fund a £50,000 salary equivalent.
Step 5: translate the floor into other formats. On a 7.5-hour day, £55 an hour is £55 × 7.5 = £412.50 a day. For a fixed project you estimate at 20 hours, the floor price is 20 × £55 = £1,100 before any allowance for scope risk. Convert between formats with the rate converter rather than letting a client divide on their assumed day length, and sanity-check hourly figures with the hourly rate calculator.
Now check the floor against the market. Published 2026 benchmarks put UK freelance designers at £250 to £325 a day at midweight level and £350 to £425 a day at senior level, with digital product designers higher still. A £412.50 day rate sits at the top of the senior band: plausible for an experienced specialist, ambitious for a beginner. The full figures are in our guide to freelance hourly rates by profession.
Why does your billable-hours assumption change everything?
Because your rate is revenue divided by hours, every hour you wrongly assume you can bill lowers the price of every hour you actually sell. Using 2,080 hours instead of a realistic 1,200 cuts the rate by over 40 percent on identical income.
Here is the same £65,000 revenue target divided five different ways. Only the hours change:
| Billable hours assumed | How you get there | Rate on a 65,000 pound revenue target |
|---|---|---|
| 2,080 | 40 hours × 52 weeks, no time off, no admin | £31.25 an hour |
| 1,560 | 30 hours × 52 weeks, still no time off | £41.67 an hour |
| 1,200 | 25 hours × 48 weeks, the worked example above | £54.17 an hour |
| 1,000 | About 21 hours × 48 weeks, heavy admin or part-time client load | £65.00 an hour |
| 800 | About 17 hours × 48 weeks, portfolio career or long gaps | £81.25 an hour |
Read the first row carefully. Price at £31.25 because you divided by 2,080, then actually bill 1,200 hours, and you earn £31.25 × 1,200 = £37,500 against a £65,000 target: busy all year, and still £27,500 short. Your skill did not fail. The divisor did.
Where does the non-billable time go? Proposals, discovery calls, invoicing and chasing payment, bookkeeping, tax returns, marketing, learning new tools, and dead time between projects. Track your own split for a month if you doubt the 25-hour figure. Most full-time freelancers land between 20 and 30 billable hours a week, which is why 1,000 to 1,300 hours a year is the realistic planning range.
Watch out: Never negotiate against your own divisor. When a client says your rate looks high next to a salary, they are comparing it with pay spread over 2,080 hours plus employer-funded benefits. Your rate funds the same life from roughly 1,200 paid hours, with no employer at all. Our guide to freelance hourly rate versus salary shows why the two are not like for like.
Floor, target and premium: the three-rate decision framework
One rate is not enough, because jobs differ in value, urgency and risk. Use three rates, built from the same floor. This is the step most rate guides skip: they hand you a floor and leave you to improvise quotes above it.
| Rate | In the worked example | What it is for |
|---|---|---|
| Floor rate | £55 an hour | Your walk-away minimum. Below this, the job loses money against your plan. Never quote it, never breach it without a deliberate reason. |
| Target rate | £65 to £70 an hour | Your standard quote: floor plus a margin for profit, slow months and proven experience. Most work should be priced here. |
| Premium rate | £85 an hour and up | Scarce specialism, rush deadlines or high-value outcomes. Value-based pricing, checked against the floor, not derived from it. |
The example figures follow from the same freelancer’s £55 floor, so you can see the spacing. Your numbers will differ. The structure should not: a floor you protect, a target you quote by default, and a premium for speed, scarcity or results rather than hours.
Three decision rules make the framework work in practice:
- If your floor is below the market rate, quote the market, not the floor. The floor is a minimum rate, not a price tag. Pocket the difference as profit and buffer for quiet quarters.
- If your floor is above what your current market will pay, fix the inputs, not the rate. Narrow the specialism, aim at clients with bigger budgets, cut a real cost, or build proof that supports the premium tier. Discounting just schedules the shortfall.
- If a job is priced per project, back-solve it against the floor. Divide the fee by the hours it will honestly take, including revisions and calls. Below your floor? Raise the fee, cut the scope, or walk away. Our walkthrough of retainer versus hourly versus project pricing covers how each model shifts that risk.
A short scenario shows the back-solve catching a bad deal. A client offers £900 for a website refresh you estimate at 18 hours, plus revision rounds that add 4 more. Honest hours: 22. £900 ÷ 22 = £40.91 an hour, well below the £55 floor. Your options: quote £1,210 (22 × £55) as the floor-consistent fee, hold £900 but cut the scope to about 16 hours with revisions charged separately, or decline. What you no longer do is accept £900 and discover the effective rate in month three.
Should you charge hourly, by the day or per project?
Use your hourly floor as the private maths behind every quote, then choose the format that suits the job: hourly for open-ended work, day rates for on-site blocks, and fixed project prices once you can estimate hours reliably and price in scope risk.
| Format | Best for | Main risk | Floor check |
|---|---|---|---|
| Hourly | Open-ended support, maintenance, unclear scope | Efficiency gains cut your pay; clients watch the clock | Quote at target rate; track hours honestly |
| Day rate | On-site days, workshops, contracting blocks | Disagreement over how many hours a day contains | Hourly floor × agreed day length; state the day length in the quote |
| Fixed project price | Defined deliverables you have delivered before | Scope creep turns profit into unpaid hours | Estimated hours × target rate, plus a scope allowance; back-solve after quoting |
| Retainer | Recurring monthly work and priority access | Unused hours and blurred boundaries | Monthly fee ÷ expected hours must stay at or above floor |
Whatever format you quote, protect the margin inside it. A generous-looking fee can still fail once platform fees, payment charges or a discount eat into it, so test the net figure with the profit margin calculator before you commit. Revisit the calculation every 6 to 12 months, not when money gets tight, and raise rates for new clients first. Our guide on how to raise your freelance rates includes the client email template. If a client asks for a discount, run the numbers first. Our guide on how to calculate a discount shows what it really costs your profit.
Key takeaways
- Set your rate from the formula: (income goal + business expenses + tax and benefits reserve) divided by billable hours. Check market benchmarks second, never first.
- Worked example: a £50,000 salary equivalent plus a 30 percent reserve needs £65,000 of revenue. Over 1,200 billable hours that is £54.17, so £55 an hour is your floor.
- Billable hours are the trap. Dividing by 2,080 fantasy hours instead of 1,200 real ones cuts your rate by over 40 percent, and your year-end income with it.
- Run three rates, not one: a floor you never breach, a target you quote by default, and a premium for scarce, urgent or high-value work.
- Back-solve every project fee: fee divided by honest hours must land at or above your floor, or you reprice, rescope or walk away.
Frequently asked questions
How do I work out my minimum freelance rate?
Add your income goal, business expenses and a reserve for tax, pension and unpaid time, then divide by the billable hours you can realistically sell. Using a 30 percent uplift as the reserve: a £50,000 goal needs £65,000 of revenue, and £65,000 divided by 1,200 billable hours gives £54.17, quoted as £55 an hour.
How many billable hours should a freelancer plan for in a year?
Plan on 1,000 to 1,300 billable hours a year if you freelance full-time. A common planning figure is 25 billable hours a week for 48 weeks, which is 1,200 hours. The rest of your time goes on proposals, admin, marketing, invoicing and gaps between projects. The four missing weeks cover holiday, sickness and quiet spells.
Is copying what other freelancers charge a good way to set my rate?
No. Other freelancers have different costs, tax positions, billable hours and client types, so their rate funds their life, not yours. Work out your own floor from the formula first, then use published benchmarks for your profession as a check on whether the market will support it.
What if my floor rate is higher than clients seem willing to pay?
Do not quietly discount below the floor, because the shortfall repeats on every hour you sell. Change an input instead: narrow your specialism, target clients with larger budgets, cut a genuine cost, or build case studies that support premium pricing. If none of that closes the gap, the niche may not fund your income goal.
How often should I raise my freelance rate?
Review your rate every 6 to 12 months and after any clear jump in demand or specialism. Raise it for new clients first, then bring existing clients up with notice at a natural break point such as a new project. Small regular rises are easier to accept than one large correction.
Should I share my hourly rate if I charge per project?
You do not have to. Your hourly floor is a private costing tool. Quote the project price, deliverables and terms, and keep the hourly maths behind it. If a client asks how the price was built, explain scope, timeline and revisions rather than opening a negotiation about your internal rate.
Rates last reviewed: October 2026. The 30 percent uplift and billable-hour ranges here are planning rules of thumb, not official rates. Replace them with your own tax position, expenses and tracked hours. This guide is for general information only and is not financial, tax or legal advice.