How to Set Your Freelance Rate Without Underselling

Most freelancers price by gut feeling and quietly resent the result. A rate you can defend comes from three numbers and one mindset shift: clients pay for outcomes, not for hours.

Start from the income you need

Work backwards, not forwards. Pick a target annual income, then account for the reality of freelancing:

• Only ~60-70% of your time is billable (the rest is sales, admin, learning).
• You cover your own taxes, tools, insurance, and unpaid time off.

Divide your target by your billable hours — not 2,080 — and you will usually find your number is higher than you guessed.

Anchor to value, then sanity-check the market

A dashboard that saves a sales team ten hours a week is worth far more than the hours it takes you to build. Price toward that value, then check the result against typical market rates so you are neither leaving money on the table nor pricing yourself out.

Hourly vs fixed price

• Hourly fits open-ended or fast-changing scope — you are protected from churn.
• Fixed price fits a well-defined deliverable and rewards your efficiency: finish faster and your effective rate rises.

Raise rates on new clients first

Test a higher number on your next proposal, not your existing relationships. If your close rate stays healthy, the rate was too low. Repeat until it pinches — then you have found the market.

The cheapest freelancer attracts the most demanding clients. Pricing fairly is also how you filter for good ones.