When I started freelancing, I quoted $50/hour. After six months, I realized I was actually making $22/hour after software costs, subcontractors, and taxes.
The problem is obvious: we forget all the hidden costs. Here's a quick framework:
The 3 numbers you need to track:
- Direct project costs — software licenses (Adobe, Figma, etc.), contractor fees, stock assets
- Operating overhead — your monthly rent/phone/internet divided by projects
- Tax set-aside — 25-30% depending on your country
The formula:
True Hourly Rate = (Project Revenue - Direct Costs - Overhead - Taxes) / Hours Worked
I built a free Google Sheets calculator that does all the math for you. It includes:
- Project profit calculator with auto tax deduction
- Hourly rate analyzer (break-even, 20%, 30%, 40% margin rates)
- Tax set-aside tracker with running total
- Annual dashboard with blended rate
Grab the template here: https://microtoolsb2b.gumroad.com/l/sU_YTncDEIJdbMoPiDEZmA (free to copy)
Stop underquoting yourself. Know your numbers.
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