You're Probably Undercharging
I've mentored dozens of freelancers. Almost all of them made the same mistake:
"I want to make $80k/year, so I'll charge $40/hour"
Wrong. Here's why.
The Real Math
What Most People Think:
$80,000 ÷ 2,000 hours = $40/hour
Reality:
income_goal = 80000 # Take-home target
tax_rate = 0.30 # 30% taxes
expenses = 5000 # Software, gear, etc.
billable_hours = 25 # Per week (not 40!)
weeks_off = 4 # Vacation, sick days
# Actual calculation
working_weeks = 52 - weeks_off # 48
total_billable = billable_hours * working_weeks # 1,200 hours
gross_needed = income_goal / (1 - tax_rate) # $114,285
total_needed = gross_needed + expenses # $119,285
hourly_rate = total_needed / total_billable # $99.40/hour
$99/hour - not $40.
Why 25 Billable Hours?
You can't bill 40 hours/week. Here's where time goes:
| Activity | Hours/Week |
|---|---|
| Client work (billable) | 25 |
| Admin, invoicing | 3 |
| Marketing, sales | 5 |
| Learning, upskilling | 3 |
| Email, meetings | 4 |
| Total | 40 |
The 5 Mistakes
❌ Forgetting taxes (25-40% gone)
❌ Assuming 40 billable hours
❌ Ignoring business expenses
❌ Skipping vacation/sick time
❌ Not accounting for unbilled work
Calculate Yours
I built a free calculator: freelancehourly.site
Enter your:
- Income goal
- Expenses
- Tax rate
- Realistic billable hours
Get your actual minimum rate.
The Confidence Problem
Knowing your rate is step 1. Charging it is step 2.
Here's what helped me:
- Know your floor - Below this rate, you're losing money
- Value-based framing - "This will save you $X" not "I charge $Y"
- Say the number and shut up - Don't justify immediately
What's your current rate vs. what it should be? Share in comments (anonymously if you want).
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