Most freelancers set their rate by asking what others charge, then going slightly under. That produces a number with no relationship to what they need to earn.
Here is the arithmetic instead.
You have fewer billable hours than you think
A full-time job is 40 hours. Freelancing is not, because a large part of your week is unpaid:
- Finding clients and writing proposals
- Calls, scoping, revisions that were not agreed
- Invoicing, chasing payment, bookkeeping
- Learning, admin, tax
Realistic billable time is 20-25 hours a week, and that is for an established freelancer. In the first year, 15 is common.
Pricing as though you bill 40 is how people work constantly and still fall short.
The calculation
Say you want $80,000 a year.
- Target income: $80,000
- Add tax. Self-employment tax plus income tax commonly lands near 30% for a freelancer at this level, so you need roughly $114,000 gross.
- Add expenses — health insurance, equipment, software, accountant. Health insurance alone is often $6,000+ a year. Say $14,000. Now $128,000.
- Billable hours: 22 a week × 46 working weeks = 1,012 hours
- Rate: $128,000 ÷ 1,012 = $126 an hour
Round to $130.
If that feels high against what you are currently charging, that gap is the reason the year feels tight.
Per hour or per project
Bill per project wherever you can.
Under hourly billing, getting faster reduces your income. You spend three years becoming twice as good and earn the same per job. That is a strange incentive to accept.
Under project pricing, the efficiency is yours. A task that took ten hours last year and takes four now pays the same and gives you six hours back.
Quote a project by estimating the hours honestly, multiplying by your rate, and adding 20% for the revisions and scope drift that always happen.
Hourly is defensible for genuinely open-ended work — ongoing retainers, consulting where the shape is unknown.
The employee comparison people get wrong
A $60,000 salary is not equivalent to $60,000 of freelance revenue.
The employer was also paying half your payroll tax, some or all of your health insurance, and giving you paid time off. Replacing all of that yourself commonly costs 30-40% on top.
So matching a $60,000 job takes roughly $80,000-$85,000 in freelance revenue. Anyone who left a salary and feels poorer at the same headline number is not imagining it.
Raising your rate
Raise it on new clients first. Quote the new number and see what happens. If nobody objects for three consecutive quotes, it was too low.
For existing clients, give notice in plain terms:
From 1 November my rate is $150 an hour. I have enjoyed working with you and wanted to give plenty of notice.
Some will leave. Those are usually the ones who consumed the most time for the least money. Losing them is the point, not the risk.
The floor nobody mentions
If a rate means you cannot take a day off when ill, cannot set money aside for tax, and cannot invest in getting better — it is not a low rate, it is an unsustainable one. You will burn out and conclude freelancing does not work, when the arithmetic never worked from the first day.