Freelancers often compare their rate to an employee's hourly wage and undercharge. They forget taxes, benefits and unpaid time.
Work backward from your income goal
Add desired take-home pay, business expenses and benefits such as health insurance and retirement, then gross it up for taxes. Divide by realistic billable hours. Many freelancers bill only 50%–70% of working time because of admin, marketing and gaps.
Hourly, day or value-based
Hourly rates are simple but cap your income. Day rates and fixed project fees reward efficiency. Value-based pricing ties your fee to the client's outcome and can command significantly higher rates.
Raise rates regularly
Review rates at least annually. Raise them for new clients first, and give existing clients notice. If everyone says yes immediately, you are probably too cheap.
Try the numbers
Use our Freelance Hourly Rate Calculator to see this in practice. With its default example (Desired annual take-home: $90,000; Business expenses / yr: $8,000; Health insurance & retirement / yr: $12,000), it shows hourly rate to charge: $138. Adjust the inputs to match your situation.
Key takeaways
- Include taxes, benefits and unpaid time in your rate.
- Project or value-based pricing can raise income.
- Review and raise rates yearly.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.