Work backwards from the income you need, not forwards from an hourly rate. Take your target income, add tax and costs, then divide by realistic billable hours, which is 20 to 25 a week rather than 40. That number is your floor. Then quote fixed prices for defined pieces of work instead of selling hours.
Most people do the opposite. They pick a first rate by halving whatever sounds arrogant, hold it for two years, get busier, earn the same, and conclude that freelancing does not work. Here is the arithmetic that avoids it.
Start from the year, not the hour
An hourly rate is an output of your maths, not an input. Work backwards.
Pick the income you need: actual need, plus tax, plus the things an employer used to pay for. Then be honest about how much of your time is billable. Nobody bills 40 hours a week. Between sales, admin, invoicing, unpaid scoping calls and the weeks nothing comes in, 20 to 25 billable hours is a realistic ceiling for a solo freelancer, and that is a good year.
| Input | Example |
|---|---|
| Target income (after costs, before tax) | 60,000 |
| Tax, insurance, software, hardware, accountant | +35% |
| Gross needed | ~81,000 |
| Billable weeks (holiday, sickness, quiet spells) | 44 |
| Billable hours per week | 22 |
| Rate | 81,000 / (44 × 22) ≈ 84 per hour |
Currency is yours. The point is the shape: the honest divisor is much smaller than 52 × 40, and every rate calculation that ignores that produces a number you cannot live on.
Then stop selling hours
The hourly number is for your own reference. What you quote should usually be a price for an outcome.
Fixed price for a defined slice of work is better for both sides once you can estimate:
- The client knows what they are spending before they commit.
- You are paid for the result, so getting faster makes you more, not less.
- Nobody has to argue about whether Tuesday afternoon counted.
The catch is estimating, and the fix is scope. Quote fixed prices for work small enough that you can see the end of it, a week or two. For anything longer, quote in phases with a price each.
What to do about the "what's your rate?" question
Answer it with a number and a frame, immediately:
For a defined piece of work I quote a fixed price. A checkout flow like the one you described is usually in the 2,000 to 3,000 range depending on how much of the billing logic already exists. If you would rather work by the day, that is 650.
You have given a real answer, anchored the conversation, and shown that you have done this before. What you have not done is ask them to guess, which is what "it depends on the project" does.
Raising it
Two rules that make this less frightening.
Raise the price for new clients first. Existing clients keep their rate until there is a natural break: a new project, a new year, a new phase. Then tell them once, plainly, with a date: "From September my day rate is 700." No apology, no essay. Most people say fine.
Raise it when you are busy, not when you are desperate. A queue is the only leverage that exists in this job. If you are turning work down, your price is too low. If nothing is coming in, fix the pipeline before touching the price. Cutting it makes the phone ring with exactly the clients you do not want.
The floor
Have a number below which you say no, and write it down before anyone asks. It stops the slow drift where a "small favour" for an existing client becomes a fortnight.
Cheap work does not stay cheap. It takes the same meetings, the same emails and the same bug reports as expensive work, and it crowds out the client who would have paid properly, because you were busy.
Where to start
Run your own numbers through the rate calculator. It does the arithmetic above and shows its working, including what the same target income needs at 15, 20, 25 and 30 billable hours a week.
Once you have a floor, how to raise your freelance rates without losing clients covers the harder half: moving existing clients onto it without the conversation going badly.