How to set a freelance hourly rate
A rate is a decision you make once and then live with, so it is worth deriving carefully. This guide shows three ways to arrive at a number, a worked example and what to do when you work with clients in different currencies.
Updated October 20, 2026
Three ways to arrive at a rate
There is no single correct hourly rate, but there are three honest approaches, and they work best together: calculate what you need, check what the market pays, and consider what the work is worth to the client.
| Method | Answers | Weakness |
|---|---|---|
| Income target | What do I need to charge to live and run my business? | Ignores what clients will pay. |
| Market rate | What do comparable people charge? | Ignores your own costs and quality. |
| Value | What is the result worth to this client? | Needs client insight and confident pricing. |
Method 1: start from your income target
The calculation has four steps. All figures below are illustrative; replace them with your own.
Step 1: decide the take-home you want
The amount you want to keep after taxes and business costs. In our example, 60,000 per year.
Step 2: add business costs and taxes
Business costs are what you pay to work: software, equipment, insurance, accounting, a workspace. Taxes and contributions depend on your country, so check what applies to you. In the example, costs are 8,000 per year and taxes and contributions take 25% of profit.
profit before tax = take-home ÷ (1 − tax rate) = 60,000 ÷ 0.75 = 80,000
revenue needed = profit before tax + business costs = 80,000 + 8,000 = 88,000
Step 3: estimate the hours you can actually bill
This is where most freelancers go wrong: they divide by every hour of the year. Instead, count the weeks you will realistically work, the hours per week, and your billable ratio (see what are billable hours).
46 weeks × 40 hours = 1,840 hours worked
1,840 × 60% billable = 1,104 billable hours
The 46 weeks leave room for holidays, sick days and public holidays; the 60% reflects time spent on sales and administration.
Step 4: divide
hourly rate = revenue needed ÷ billable hours = 88,000 ÷ 1,104 ≈ 79.7
So, in this example, a rate of about 80 per hour. Change any input and see the effect: at a 70% billable ratio the same target needs only about 68 per hour (88,000 ÷ 1,288), which shows how much a better ratio is worth.
Use your own data
Method 2: check the market
The calculated rate is a floor, not a verdict. Compare it with what the market pays for your kind of work.
- Look at public rate surveys and job boards for your discipline and region.
- Ask peers; people are often more open about rates than you expect.
- Notice what the client pays today for similar work and how they react to your quotes.
If the market rate is above your calculated floor, you have room to charge more. If it is below, either costs or the target are too high for the current market, and you should adjust the income target, reduce costs, raise the billable ratio or specialise in work that pays more.
Method 3: price by value
Sometimes an hour of your work produces far more than an hour’s worth of value for the client: a conversion fix that increases sales, a contract reviewed before a risky deal, a performance fix that saves infrastructure costs. In those cases an hourly rate under-prices the work.
You can still track hours (to learn your effective rate) while quoting a fixed price based on the outcome. The tracked hours tell you whether the price was fair to you; the outcome tells you whether it was fair to the client.
Working with clients in different currencies
If your clients are in different countries, you can set a rate per currency instead of converting one number. Choose a rate that feels right in each currency (for example 80 USD, 75 EUR, 65 GBP) rather than converting mechanically, because the market in each currency differs and round numbers are easier to quote.
In Tickario each rate is stored together with its currency, on the client, the project or the entry, so every client can have their own rate in their own currency. Reports and the dashboard show totals per currency and never silently merge them. See billable hours tracking.
Raising your rate
- Raise for new clients first. It is the lowest-friction way to test a higher number.
- For existing clients, give notice. Tell them in advance (for example a month or a quarter ahead) and give a short reason: your costs, your experience or the scope you now cover.
- Make it routine. Reviewing the rate once a year, with your tracked data in front of you, is easier than a one-off argument.
One thing to know about Tickario: cost is calculated from the rate currently set on the project or client, so changing that rate also changes the cost shown for earlier entries of the same project. To keep past periods as you billed them, export the reports you need before you change a rate, or start a new project for the new rate.
Frequently asked questions
Should I charge hourly or a fixed price?
Hourly works when scope is unclear or likely to change. Fixed price works when scope is well defined and you can estimate it. Many freelancers use hourly rates internally to price fixed projects and track hours to check the result.
Should my rate include taxes?
Your rate is the amount you charge before your own taxes and contributions. The example above builds taxes into the revenue you need, so the rate covers them.
How many hours can a freelancer bill in a year?
It varies widely. Use the structure in this guide (weeks worked × hours per week × billable ratio) with your real numbers. Tracking a few months of time gives you better figures than any average.
This guide is general information, not financial, legal or tax advice. The figures are illustrative.