The number one regret most freelancers have after their first year? They didn't charge enough.
Pricing is the hardest part of freelancing that nobody prepares you for. You can learn project management, client communication, and time management from a blog post. But when someone asks "what's your rate?" and you have to say a number out loud — that's where confidence meets math meets gut feeling, and most freelancers get it wrong in the same direction: too low.
Undercharging isn't just a money problem. It attracts clients who don't value your work, it forces you to take on more projects than you can handle well, and it makes the entire freelance experience feel unsustainable. Getting your rate right is one of the highest-leverage things you can do for your business.
Here's how to figure out what to charge — and how to make sure your actual earnings match your intended rate.
Start With What You Need to Earn
Before you look at what other freelancers charge, figure out what you need to make. This is your floor — the minimum rate below which freelancing doesn't make financial sense for you.
Calculate your annual expenses. Add up everything: rent or mortgage, utilities, food, insurance (health, liability, professional), taxes (freelancers typically pay 25–30% of gross income in self-employment and income taxes), retirement savings, business expenses (software, equipment, domain registrations, subscriptions), and anything else that goes out the door regularly.
Determine your billable hours. This is where most freelancers overestimate. A full-time employee works roughly 2,080 hours per year (40 hours × 52 weeks). As a freelancer, you won't bill all of those. Subtract time for vacation and sick days (let's say 3 weeks), holidays (another 2 weeks), and — this is the big one — non-billable work like admin, marketing, invoicing, bookkeeping, and business development. Most freelancers find that 25–35% of their working time is non-billable.
A realistic estimate for a full-time freelancer is around 1,000 to 1,400 billable hours per year.
Do the division. If you need $80,000 per year and you'll bill 1,200 hours, your minimum rate is roughly $67/hour. That's your floor. You should charge more than this — the floor doesn't include profit, growth, or a cushion for slow months.
Research the Market
Your floor tells you what you need. The market tells you what clients will pay. Your rate should sit somewhere between the two, ideally closer to the market ceiling than the floor.
Look at rate surveys and industry benchmarks for your specific skill set and experience level. The Freelancers Union, Upwork's rate guides, and industry-specific communities all publish useful data. Keep in mind that rates vary enormously by geography, specialization, and the type of client you work with. A branding consultant serving startups in a major metro area commands a very different rate than a generalist graphic designer working with local small businesses.
Talk to other freelancers in your field. Not to copy their rates, but to understand the range. Most freelancers are surprisingly open about pricing when asked directly, especially if you're not competing for the same clients.
Pay attention to what clients push back on. If you're quoting rates and nobody ever says no, you're probably too cheap. If every prospect balks, you might be pricing above what your portfolio and experience justify — or you might be talking to the wrong clients.
Hourly vs. Project-Based vs. Retainer
Your rate structure matters as much as the number itself.
Hourly billing is the simplest and most transparent. You track your time, multiply by your rate, and invoice the total. Clients know exactly what they're paying for, and you get paid for every hour you work. The downside is that it penalizes efficiency — if you get faster at your work, you earn less per project. It also creates an unpredictable income, since billable hours fluctuate month to month.
Project-based (flat fee) billing ties your compensation to the deliverable rather than the time. This rewards efficiency and gives clients budget certainty. The risk is underestimating the scope — if a project takes twice as long as expected, your effective hourly rate drops accordingly. Accurate scope definition and change-order clauses in your contract are essential.
Retainer billing provides recurring monthly income in exchange for a set number of hours or a defined scope of ongoing work. This is the most stable billing model and works well for ongoing relationships — content creation, consulting, maintenance work. The key is defining clearly what's included and what falls outside the retainer scope.
Many successful freelancers use a mix. Retainers for steady clients, project fees for defined deliverables, and hourly billing for ad hoc work and scope additions.
Regardless of which model you use, tracking your actual hours is essential. For hourly billing, it's how you generate invoices. For project-based and retainer work, it's how you measure profitability. If you quoted a $3,000 flat fee and the project took 60 hours, your effective rate was $50/hour — and you need to know that to price the next project better.
This is one of the reasons we built time tracking into the core of byllr. Whether you're billing hourly and need precise logs for your invoices, or billing flat rates and want to understand your true effective rate, every hour is captured and tied to a client and project. Your time data becomes the foundation for smarter pricing decisions, not just an invoicing input.
The Psychology of Pricing
Pricing isn't purely rational — there's a psychological dimension that affects both you and your clients.
Anchor high. When presenting options, lead with your premium offering. If you offer three tiers of service, the highest-priced option makes the middle one feel reasonable by comparison. This isn't manipulation; it's framing. You're helping the client see the value spectrum.
Don't apologize for your rate. The moment you say "I know this might be a lot, but..." you've undermined your own pricing. State your rate clearly and confidently. If the client pushes back, you can discuss scope adjustments — but don't discount yourself preemptively.
Round up, not down. $75/hour feels more confident and professional than $72/hour. Clean numbers signal that you've established your pricing deliberately, not that you're calculating your minimum viable rate on the spot.
Raise your rates regularly. At minimum, revisit your pricing annually. Your skills improve, your efficiency increases, and inflation erodes your purchasing power. If you've been charging the same rate for two years, you're effectively earning less than when you started. Notify existing clients in advance ("Starting next quarter, my rate will be $X") and apply new rates to all new clients immediately.
Tracking Your Effective Rate
Here's where most freelancers miss a critical insight: your quoted rate and your effective rate are often very different numbers.
Your quoted rate is what you tell clients you charge. Your effective rate is what you actually earn per hour of work when you account for all the time a project takes — including unbilled admin, scope creep, revision rounds, and communication overhead.
If your quoted rate is $100/hour but a 10-hour project actually takes 15 hours (with meetings, emails, and revisions you didn't bill for), your effective rate is $67/hour. That 33% gap is invisible unless you're tracking all of your time, not just the hours that make it onto the invoice.
This is why tracking non-billable project time matters. In byllr, you can log time against a project even if you don't include every entry on the final invoice. Your reports then show you the total time spent versus the total billed, giving you a clear picture of which clients and project types are actually profitable — and which ones are quietly eroding your rate.
Armed with that data, you can make informed decisions: raise your rate for a specific client, add a project management fee to complex projects, or tighten your scope definitions to reduce unbilled work.
When to Raise Your Rates
The right time to raise your rates is almost always sooner than you think. Here are clear signals:
- You're booked solid with no room for new work (demand exceeds supply — classic time to raise prices)
- You haven't adjusted in over a year
- You've gained significant new skills, certifications, or portfolio pieces
- Your client results have improved measurably
- You're consistently delivering more value than your rate reflects
- You dread certain projects because the compensation doesn't match the effort
When raising rates for existing clients, give 30–60 days' notice. Frame it around the value you provide and any increased costs you're absorbing. Most clients who value your work will accept a reasonable increase. Those who don't were probably already getting a deal, and replacing them at your new rate is a better long-term move.
The Bottom Line
Your freelance rate should cover your expenses, reflect the market value of your skills, and leave room for profit and growth. Calculate your floor, research the market, and don't underprice yourself out of fear.
Just as importantly, track your actual hours so you know whether your quoted rate matches your effective rate. The gap between those two numbers is where freelancers silently lose thousands of dollars a year.
byllr makes this easy. Track time against every client and project — whether you bill hourly or flat rate — and let your time data inform better pricing decisions. Generate professional invoices directly from your tracked hours, and use the reporting tools to see exactly where your time and money are going. The free plan gets you started in minutes.