Why is my freelance rate so much higher than my old hourly pay?

Because it has to cover what your employer used to: benefits, the employer share of payroll tax, equipment and software, unpaid time spent finding and administering work, and months with no billing. Two to three times your old hourly figure is normal.

How many billable hours a week should I plan for?

Twenty to twenty-five is realistic for many solo freelancers. Prospecting, proposals, invoicing and admin consume a third to half of a working week and none of it is billable.

When should I raise my rates?

When you're turning down work because you're full — that means demand exceeds your price. Test higher rates with each new client and give existing clients an annual increase with notice.

Freelance rates: how to price yourself without underselling

July 27, 2026 · 4 min read

New freelancers price like employees and quietly go broke. They take their old salary, divide by the hours in a working year, and call that an hourly rate — then wonder why a full calendar still leaves them short. The mistake is that an employee's salary already has a lot hidden around it: benefits, paid leave, equipment, and, crucially, someone else finding the work. A sustainable freelance rate has to cover all of that plus the hours nobody pays for. The formula is not complicated, but it has to include everything.

The honest formula

Start with your target income — what you would need to earn as an employee to live the way you intend to. Not your last salary; your target.
Add the benefits you now buy yourself. Health insurance, retirement contributions, the employer's share of payroll taxes that you now pay as self-employment tax, disability cover if you want it. This is commonly a quarter to a third on top of salary.
Add business costs. Software, equipment, a workspace, accounting, insurance, professional development, marketing. Small individually; real in total.
Add a buffer for dry months. Freelance income is lumpy. If you expect to bill ten months of the year, price for ten, not twelve.
Divide by billable hours, not working hours. A forty-hour week does not produce forty billable hours. Prospecting, proposals, invoicing, admin and unbillable revisions typically consume a third to half of the time. Twenty to twenty-five billable hours a week is a realistic planning figure for many solo freelancers.

Run those numbers and the result is usually two to three times the hourly figure you get from dividing an old salary by 2,000. That is not greed. That is what the work has to earn to be a job rather than a hobby that costs you money.

Hourly, daily, or project pricing

Hourly rates are simple and transparent but penalize you for getting faster and invite clients to scrutinize time. Day rates suit on-site or embedded work. Project pricing — a fixed fee for a defined outcome — is where experienced freelancers earn the most, because it prices the value of the result rather than the time spent. Start hourly if you need to learn how long things take; move to project pricing as soon as you can estimate reliably, and define scope in writing so that changes are billable rather than absorbed.

Check against the market, then position

Your formula gives you a floor. The market tells you the ceiling. Look at what established freelancers in your specialty charge — rate surveys from professional associations, public rate cards, and candid conversations with peers. If your floor is above the market, you need a more specialized offer or lower costs; if it is well below, you are underpricing and should move up. Specialists charge more than generalists, and freelancers who can show results charge more than those who show tasks.

Raise rates deliberately

Every new client is a chance to test a higher rate; existing clients get an annual increase with notice. A useful discipline: when you are turning down work because you are full, your rate is too low. Raise it for the next inquiry. Losing the most price-sensitive prospects is the mechanism by which your rate rises to match your demand.

The conversations that protect your rate

Quote in writing with scope, deliverables, timeline and payment terms. Verbal agreements are where underpayment starts.
Take a deposit on project work — a third to a half up front is normal.
Define revisions. Two rounds included; further rounds at your hourly rate.
Decline scope creep politely and immediately. "Happy to add that — I'll send a revised quote."
Do not discount to win work you will resent. A client acquired at half rate stays at half rate.

A worked example

Target income $70,000. Add 30 percent for benefits and self-employment tax: $91,000. Add $6,000 in business costs: $97,000. Plan for ten billable months at 22 billable hours a week, roughly 950 hours. The rate is about $102 an hour — not the $35 that dividing $70,000 by 2,000 hours suggests. The gap between those two numbers is the difference between a freelance business and an expensive way to be underemployed.