Most freelancers set their rates by guessing, copying what someone else charges, or starting too low and getting stuck there. None of these work particularly well. Your rate shapes not just your income, but how clients perceive you, which clients you attract, and whether the work is actually sustainable.
Here's how to approach it with some structure.
Start With What You Actually Need to Earn
The most useful starting point isn't the market — it's your numbers. What do you need to earn, after taxes and expenses, to live the way you want to live?
Work backwards from there:
- Annual personal income target. What you want to take home after tax.
- Add tax. If your effective tax rate is 30%, divide your target by 0.7 to get your gross freelance income target.
- Add business expenses. Software, equipment, insurance, professional development — estimate annually.
- Add your non-billable time. Sales, admin, business development, sick days, holidays. Most freelancers work around 1,200–1,400 billable hours per year, not 2,000.
Divide the total by your estimated billable hours and you have your minimum viable hourly rate. This is your floor — not your rate.
Example:
- Target take-home: $70,000
- Gross income needed (at 30% tax): ~$100,000
- Annual expenses: $8,000
- Total revenue needed: $108,000
- Billable hours (1,200): $90/hr minimum
If the market won't support $90/hr for what you do, either your expenses need to come down, your target income needs adjusting, or you need to move into a higher-value niche.
Check What the Market Pays
Your minimum viable rate tells you whether freelancing in your current niche is viable. But it doesn't tell you where to pitch your rate.
Research what others charge in your field and market:
- Freelancer communities and forums often have rate discussions
- Job boards that show project budgets give a real-world sense of what clients expect to spend
- Industry surveys (Bonsai, Zip Recruiter, and others publish annual freelance rate reports)
The range is usually wide. The rate you should charge is rarely at the bottom of that range.
Why Low Rates Work Against You
Charging too little sends a signal. Clients — especially experienced ones — associate low rates with low experience or low confidence. A designer charging $30/hr is not competing with a designer charging $120/hr. They're operating in different markets, attracting different clients, and doing different quality of work in the client's perception.
Low rates also attract the most difficult clients. Clients who squeeze on price typically squeeze on everything else too — scope, deadlines, revisions, respect for your time.
And practically: if you're undercharging, you need more clients to hit your income target. More clients means more admin, more communication, more context-switching, and less time to do the work that would justify a higher rate.
Project Rate vs. Hourly Rate
Hourly rates are transparent and simple for ongoing work. But they cap your earnings — you can only work so many hours — and they create a perverse incentive where being efficient costs you money.
Project rates change the dynamic. You're pricing the outcome, not the time. A client pays $8,000 for a website, not $95/hr for however long it takes. If you're good at what you do, efficiency works in your favor.
Project pricing requires understanding how long things actually take. Track your hours even when you're billing flat rates — it's the only way to know if your project rates are working in your favor.
Raising Your Rate
Existing clients: give notice (typically 30–60 days), explain briefly that your rate is increasing, and state the new rate with confidence. Most of the time, a simple "I'm adjusting my rate to $X/hr from [date]" is enough. Don't over-apologize. Clients who respect your work will stay.
New clients: just quote the higher rate. You have no idea what they expect to pay. Most first-time rate anxiety is unfounded.
A useful rule of thumb: if no client has ever pushed back on your rate, it's probably too low.
The Rates You Charge Shape the Business You Build
Higher rates give you fewer clients, more time per engagement, better work, and more capacity to develop your craft. Lower rates give you more volume, more admin, more stress, and less time to improve.
The goal isn't to charge as much as possible — it's to charge a rate that reflects the value you deliver and makes the work sustainable.
TAV tracks your hours, projects, and earnings so you can see exactly what you're making per client and per project — making it easier to see where your rate is (and isn't) working for you.