How to Determine Your Rates for Freelance Work
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
Fast Facts
Earning potential:
Unlimited
Base rates on:
Expected annual income and expenses
Negotiation skills:
Showcase your work, experience and skill set
Pricing type:
Hourly, project-based
One of the most important yet confusing aspects of working as a freelancer is knowing what rates to quote to potential clients. Nobody wants to undersell themselves, but you don’t want to risk coming off as too expensive and deterring the clients, either.
So how can you strike the right balance? Is there a way to figure out a freelancer rate that is competitive but won’t exploit you?
There is no hard and fast rule when it comes to this, and every industry has their own common practice, but there are a couple of things you can think about as you put together your freelance proposals.
In this article
Research industry averages
Let’s start with something obvious: research. If you’re new to the industry, it’s always best to circle the field and see what kind of offers are usually made out there. This involves more than just looking at Upwork, where an hourly rate is visible on the freelancers’ profiles.
Sites like Upwork are relatively relaxed when it comes to vetting their freelancers — meaning there are a lot of beginners who are ready to offer their freelance services at incredibly low prices. On top of that, these rates were made to appeal to clients, so it won’t necessarily reflect what the freelancers themselves see as a good range. In other words, general freelancer sights are unlikely to provide you with a reliable average.
Instead of browsing them, you should reach out to freelancers in your industry. Freelance writers and editors, for instance, can often be found on Twitter with hashtags like #WritingCommunity and #AmEditing. You might also find your people on LinkedIn, in Facebook groups, or on Reddit. These are the people you want to talk to — they have the experience and insight necessary to give you a general picture of the fees and rates in the industry.
Take your costs into account
The next piece of advice is to make sure that your rates, whatever they may be, cover your costs. This applies especially to those who freelance full-time and are trying to make a living out of their work.
To start, think about your budget: what’s the minimum amount of money you need to cover your rent, bills, and food? What else do you need for your work — are there software subscriptions or other material required?
Your project rate you set should allow you to pay for these expenses, given the amount of work you can do. Note that this does not necessarily equate to the amount of work you get since the flow of clients ebb and flow all the time. So say, ideally, you’d like to take on four projects a month — the fee for each project should at least roughly cover a quarter of your expense. It’s not clear-cut in real life, but this estimation is a good way to set yourself a price floor and prevent exploitation.
This minimum cost will vary depending on factors like where you live and your cost of living. An editor who lives in New York City, for instance, will most likely have a higher living cost than one residing in Tulsa — and both should account for this when setting their freelance editor rates.
However, this method is only helpful in determining your baseline rate, which will be lower than the average industry level. The next tip will help you see what else you should consider when setting your freelance fees.
Better banking is here.
- No account fees
- Earn up to 4.20% APY
- Up to 2-day-early-paycheck
- No-fee Overdraft Coverage.
- Do it all in one app.
- Up to $2M of additional FDIC insurance through a network of participating banks.
Evaluate your expertise
With a base ready, you can begin to work your way up to your desired rate by thinking about your experience and expertise. All of the work or training that you’ve done previously has given you knowledge that can help you succeed in whatever task your client has for you — and this knowledge is very much part of the service they’re paying for. Your rate should reflect this. Experienced freelancers can ask for a higher rate than beginners.
If you’re moving from full-time employment to freelancing, you might be able to charge clients a little higher than the average since you have professional experience. If you don’t have any experience yet but are well-trained, you can also take that into account — the theoretical knowledge could be of great use once you get to apply it practically.
So know your worth, and don’t let the pressure to win a bid for a job devalue your expertise. You can expect the client to negotiate the fee down just a little, or you might make exceptions for special customers. But underselling yourself regularly will not get you close to high-profile clients that can take your career to the next level. Be unwavering in charging what you’re worth, and you’ll get job offers that match your level.
Revise your rates regularly
Finally, to stay in the game in the long run, you have to revise your rate regularly.
Industries change and grow all the time, meaning the demand for your services and the importance of your work can also shift through the years. Subsequently, freelancers’ rates will adjust to reflect their value.
This is also not to mention your own growth as you take on more projects — with more experience, your service is bound to be more valuable than before.
As such, adjusting your rate as you go is inevitable. Stay in touch with fellow freelancers to keep up with industry trends to see if their rates have changed. You should also do a thorough assessment of your own costs and rates every six months or so. Another rule of thumb is to rethink what you charge when your clients stop complaining that the fee is too high. Always expect negotiation from your clients. It’s part of running a freelance business! When the client feels that there’s no need for a discussion, then what you offer may be better than what they expected.
That being said, if you feel like what you’re charging is fair, feel free to keep things as they are — this tip is only a reminder that you don’t have to stick to a single rate forever. With these tips, you can set up a basic system to assess, review, and set your freelance rates to remain competitive and avoid getting less than what you deserve. Freelancing can be rewarding if you know how to look out for yourself!
Pros & Cons of freelancing
Pros
- Flexibility. Freelancers can set their own schedules, allowing for a better work-life balance. They can choose when and where to work.
- Independence. Freelancers have the freedom to choose their clients and projects, leading to greater job satisfaction.
- Diverse opportunities. Freelancers can work on a variety of projects with different clients, which can be stimulating and help build a diverse portfolio.
- Potential for higher earnings. Freelancers can often charge higher rates than traditional employees, especially if they have specialized skill set.
Cons
- Income instability. Freelancers may face periods of inconsistent income, with feast or famine cycles being common.
- Lack of benefits. Freelancers do not receive benefits like health insurance, retirement plans, or paid leave, which traditional employees often enjoy.
- Self-employment taxes. Freelancers are responsible for paying their income taxes, including self-employment tax, which can be more complicated and costly.
- No job security. Freelancers do not have the job security that comes with a traditional employment contract, making long-term financial planning more challenging.
Better banking is here.
- No account fees
- Earn up to 4.20% APY
- Up to 2-day-early-paycheck
- No-fee Overdraft Coverage.
- Do it all in one app.
- Up to $2M of additional FDIC insurance through a network of participating banks.
FAQs
How do I account for non-billable hours?
Include non-billable hours (such as marketing, administrative tasks, and client communication) in your rate calculation. Estimate the total number of hours you’ll work in a year and the percentage of those that will be billable. Adjust your rate accordingly to ensure these work hours are covered.
What if a client says my rates are too high?
Be prepared to justify your rates by highlighting your experience, skills, and the quality of your freelance work. If necessary, negotiate by adjusting the scope of work or offering a discount for larger projects or long-term contracts. However, avoid undervaluing your services.
How do I calculate my hourly rate?
To calculate your freelance hourly rate, determine your desired annual salary and add any additional costs such as taxes, health insurance, equipment, and overheads. Then, divide this total by the number of billable hours you expect to work in a year.
The bottom line
To determine your freelance rates, start by calculating your expected annual income and business expenses, including taxes and overheads, to ensure these are covered. Estimate realistic billable hours, considering time for non-billable tasks. Research industry rates to position yourself competitively, reflecting your experience and the value you offer.
Choose a suitable pricing model—hourly pricing, project-based, or retainer—depending on the nature of your work. Regularly review and adjust your rates to align with your growing expertise, market demand, and economic changes. Communicate your rates clearly to clients, highlighting the value you provide, and be prepared to negotiate while ensuring your financial needs are met. This approach helps set fair, profitable rates that sustain your freelance business.
Thao Nguyen is a writer with Reedsy, a publishing marketplace where authors and freelance publishing professionals can connect and collaborate.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Share this article
