PRICING / RUNBOOK BUREAU
How Much Should I Charge as a Freelancer?
Start with the rate your business needs to cover your income goal and costs. Then test it against the work, the client and comparable services. A cost calculation gives you a floor under stated assumptions; it does not tell you the highest price a client will accept.
Start with what the business needs to support
Write down an annual personal income goal and the business expenses needed to earn it: software, equipment, insurance, workspace and professional services, for example. Keep personal living costs within your income goal rather than adding them again as business expenses.
Use a consistent basis for income and costs. The simple examples here do not calculate tax or convert a take-home target into pre-tax earnings. If your goal is after tax, account for the appropriate tax provision separately before treating the result as a usable rate.
Be honest about the hours you can sell
Working time is not all billable time. Marketing, bookkeeping, training, leave and gaps between jobs still need funding. Estimate working weeks after time off, then divide each working week between client delivery and the rest of the business.
Use your own time records where possible. If you are starting out, treat the billable percentage as an assumption to revisit, not a productivity target you must hit every week.
Use a simple floor, then allow room for uncertainty
Illustrative figures, not a suggested market rate: £36,000 income goal plus £9,000 annual expenses requires £45,000 before any buffer. At 45 working weeks × 32 hours × 62.5% billable time, you have 900 billable hours.
£45,000 ÷ 900 = £50 per billable hour. Adding a 20% safety uplift gives £60. This uplift is not a 20% profit margin, and neither figure automatically provides for tax.
Your buffer can allow room for uncertainty and reinvestment, but it cannot fix an unrealistic workload forecast. If the required rate seems unattainable, revisit costs, available capacity, the service offered and the clients you serve.
Compare like-for-like work, not random rate lists
Look at services with similar scope, experience, delivery standards and client types. A short task with a clear brief is different from work that includes research, stakeholder meetings and several approval rounds.
Ask what the client is buying: a defined deliverable, access to specialist judgment or flexible support. Use conversations, past proposals and comparable offers to test your positioning. Competitor prices provide context; they do not reveal competitors’ costs or prove what you should charge.
Choose a pricing format that fits the uncertainty
Hourly pricing can suit work whose volume is hard to define, provided you agree how time is tracked and how the client is kept informed. A fixed project fee can suit a clear deliverable, but you carry more risk if the work takes longer than expected.
You can use an hourly calculation internally without displaying an hourly price to the client. Translate the work into a project quote only after defining what is included.
Avoid decisions that disguise a weak price
- Do not divide your annual target by every hour you are awake or available to work.
- Do not match a cheaper competitor without checking the difference in scope.
- Do not discount the same package reflexively: discuss a smaller scope or different schedule.
- Do not treat one accepted or rejected proposal as proof of the perfect price. Review several comparable jobs and their actual effort.
Try the calculation with your own numbers
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Further reading: Business.gov.au: choosing a pricing strategy. These general business principles are not jurisdiction-specific tax or legal advice.