How to Set Your Rates as a Freelancer?

Are you trying to figure out how much to charge as a freelancer? We’ve all heard the phrase “time is money,” but how do you figure out what your time is actually worth? Your experience, skills, location, and the value you provide all play a big role in setting your rate — but there’s no magic formula that gives you the perfect answer.

The truth is, there’s no one-size-fits-all pricing formula for freelancers. You’ll need to pick a rate, test it with clients, and adjust as needed. This guide will walk you through different pricing strategies and help you set a rate that works for you and your clients.

Freelance Pricing Models

How you price your work can make a big difference in your business. Let’s look at the three most common pricing models freelancers use: hourly, project-based, and value-based pricing.

1. Hourly Pricing

Hourly pricing is the easiest model, especially for new freelancers. You simply set an hourly rate and charge based on the time you spend working.

✅ Good for: Tasks like customer service, virtual assistance, and ongoing support.
❌ Challenge: You might feel limited by the number of hours you can work.

Example: If you charge $40/hour and work 10 hours, you’ll earn $400.

Also Read: How to Start Freelancing with Zero Experience?

2. Project-Based (Fixed) Pricing

With fixed pricing, you charge a set amount for the entire project, regardless of how long it takes. This model works well when the project has clear deliverables.

✅ Good for: Web design, mobile app development, and creative work.
❌ Challenge: If the project takes longer than expected, you might lose money.

Example: A web design project could be priced at $1,500, whether it takes 20 or 30 hours to complete.

3. Value-Based Pricing

With value-based pricing, you charge based on the value your work creates for the client. This model requires a good understanding of the client’s business and how your work impacts their bottom line.

✅ Good for: Experienced freelancers who can prove their value.
❌ Challenge: Requires strong negotiation skills and confidence in your results.

Example: If your digital marketing campaign increases a client’s revenue by $50,000, you could justify charging $5,000 or more for your services.

Step-by-Step Guide to Setting Your Freelance Rate

Step 1: Ask Yourself These Questions

Before setting your rate, take some time to reflect on these key questions:

• How much money do I need to support my lifestyle?
• How much would I like to make each year?
• What are other freelancers charging for similar work?
• How much would I make doing the same work as a full-time employee?
• What business expenses will I have as a freelancer?
• How much value am I providing to clients?

Step 2: Set Your Annual Salary Goal

Figure out how much you need to make in a year to support yourself and your goals. Then work backward to find your hourly rate.

👉 Example: If you want to make $50,000/year and plan to work 40 hours a week with 4 weeks off, here’s the math:

• 48 working weeks x 40 hours/week = 1,920 working hours
• $50,000 ÷ 1,920 hours = $26/hour

But that’s just the starting point — now let’s adjust for non-billable hours.

Also Read: Best Freelance Jobs for Beginners in 2025

Step 3: Factor in Non-Billable Time

You won’t get paid for everything you do as a freelancer (like admin work, emails, and marketing). On average, about 60% of your time is billable.

👉 Using the same example:

• 1,920 total hours x 60% billable = 1,152 billable hours
• $50,000 ÷ 1,152 billable hours = $43.40/hour

Step 4: Include Business Expenses

Freelancers have expenses that employees don’t, like software, office space, and taxes. Add these costs to your salary goal.

👉 Example: If your business expenses are $10,000/year, your total goal becomes $60,000/year:

• $60,000 ÷ 1,152 billable hours = $52/hour

It’s normal for freelance rates to be higher than a typical salary since you’re covering more expenses yourself.

Step 5: Research Market Rates

Now that you’ve calculated your base rate, compare it with what other freelancers are charging. Check sites like Upwork and Glassdoor to get an idea of market rates in your industry.

👉 If your rate is way above the market average, you might need to adjust your expenses or salary goal. If it’s too low, you could be undervaluing your skills.

Step 6: Understand Your Value

Your experience and skills matter. A freelancer with 10 years of experience can charge more than someone just starting out. Specialized skills and proven results also justify higher rates.

👉 Example: A programmer skilled in three coding languages can charge more than someone with the same experience in only one language.

Tip: Clients are usually willing to pay more for freelancers who can show a strong return on investment.

Example Calculation

Let’s say you want to earn $60,000 a year and have $10,000 in expenses. Here’s how the math breaks down:

• $60,000 ÷ 1,152 billable hours = $52/hour

That’s your base rate — but you can adjust it depending on the project type and client value.

Bonus Tip: Use Upwork’s Freelance Rate Calculator

If you want a quick way to calculate your rate, Upwork has a handy freelance rate calculator. It’ll factor in your expenses, working hours, and income goals to give you a starting point.

Also Read: 10 Highest‑Paying Freelance Skills in Demand

Freelance Pricing Isn’t Set in Stone

Setting your rate isn’t a one-time decision. You can adjust your pricing as you gain experience and better understand your value. Don’t be afraid to raise your rates as your skills grow — clients expect to pay more for high-quality work.

Figuring out your freelance rate might feel tricky at first, but with some thought and testing, you’ll find a pricing strategy that works for you.