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Setting your hourly rate as a freelancer: how to get it right

Written by Ilias3 min read

Setting your hourly rate as a freelancer: how to get it right

One of the hardest questions for starters: what do I charge per hour? Many freelancers look at their old gross salary and add a bit on top. That almost always goes wrong, because as an entrepreneur you have to pay for far more yourself than you think. This article explains how to calculate a rate you can actually live on.

Why isn't your old salary a good starting point?

As an employee, your employer paid for your holidays, sick days, pension, insurance and employer's contributions. As a freelancer all of that comes out of your own rate. On top of that, far from all your hours are billable: acquisition, admin, travel time and writing quotes earn you nothing. Someone working forty hours often invoices only twenty-five to thirty.

How do you work from net income to a rate?

Start with what you need net per month to live on. Add your business costs: insurance such as disability cover, pension contributions, software, phone, transport and your bookkeeper. Then add the income tax and the healthcare act contribution you pay on your profit. Divide that annual amount by your billable hours, allowing for holidays and a few sick days. Only then do you have your minimum hourly rate. For most freelancers it quickly turns out considerably higher than they expected.

What is the market doing?

Your calculation is the floor; the market sets the ceiling. Look at what comparable freelancers in your field and region charge. Specialisation pays off: the more specific your expertise, the less comparable you are and the more room you have. And remember that too low a rate doesn't just cost money, it also sends a signal about your quality.

When do you raise your rate?

At least once a year, if only in line with inflation. The easiest moment is with new clients: they don't know your old rate. With existing clients, announce an increase well in advance with a short, businesslike explanation. Almost nobody walks away over a reasonable increase.

What's sensible to do?

Do the calculation properly once, with your real costs and your real billable hours, and repeat it every year. We regularly work through these sums with starters, and the outcome is nearly always an eye-opener. Unsure about your numbers? Run them past us.

This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.