Pricing is where most freelancers leave money on the table.
They either charge too little (because they're scared) or too much (before they have proof). Neither works long-term.
Here's the formula I use, and it's embarrassingly simple.
The Formula
Your Rate = (Target Monthly Income + Business Costs) / Billable Hours
Let's say you want $5,000/month, spend $300 on tools/subscriptions, and can bill 80 hours/month (a realistic 40% utilization):
($5,000 + $300) / 80 = $66.25/hour
Round up to $70/hr. Done.
Why Most Freelancers Price Wrong
The "what feels fair" method — You think about what you'd accept, not what the market pays. Usually leaves 30-50% on the table.
The "hourly rate from my old job" method — Your employer was paying employer taxes, benefits, overhead, and making a profit margin on you. Your contract rate should be 1.5-2x your salary hourly equivalent.
The "I'll charge less to get clients" method — This attracts budget clients who argue over every invoice and disappear when you raise rates.
The Tiered Package Approach
Instead of hourly, offer packages:
| Package | What's Included | Price |
|---|---|---|
| Basic | Core deliverable, 1 revision | $300 |
| Standard | Core + extras, 2 revisions | $600 |
| Premium | Everything + ongoing support | $1,200 |
Packages anchor clients on "which tier" not "whether to hire you."
Tracking Your Rates Over Time
Once you start billing, you need a system to track:
- Which clients pay on time vs. late
- Which project types are most profitable
- When to raise rates (hint: when you're turning down work)
I built a simple CSV-based tracking system for this. Four spreadsheets, no software subscription required:
- Client Tracker — contact info, rate agreed, payment status
- Project Tracker — deliverables, timeline, hours spent
- Invoice Tracker — amount, due date, paid/unpaid
- Weekly Review — what worked, what to change
If you want the templates pre-built, I packaged them up → Freelance Business Starter Kit ($9) — 4 CSV templates + README with setup instructions.
The Raise-Rate Trigger
Raise your rate when:
- You're booked 2+ weeks out consistently
- Clients are accepting your proposals without negotiating
- You've completed 3+ projects at the current rate
Each rate raise should be 15-25%. You'll lose some clients. That's the point.
The Quick-Start Script
Not sure where to start? Answer these:
- What's your minimum monthly number (rent + food + bills + small savings)?
- How many hours can you actually work per week (not "I'll work 60 hours" — be honest)?
- What's your expected utilization rate (40-60% is realistic for new freelancers)?
Plug into the formula. Add 20% buffer. That's your starting rate.
If you're tracking projects in spreadsheets already, the Freelance Business Starter Kit gives you a clean starting structure instead of building from scratch.
What's your biggest pricing challenge? Happy to help in the comments.
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