Whether you’re an engineer, a copywriter, or a marketing expert, all freelancers have one
challenge in common: setting a reasonable hourly rate. Beginners in particular often have a hard
time deciding their hourly rate. Read on to avoid making rookie mistakes when it comes to
setting your freelance rates!
Oftentimes, freelancers undervalue themselves and offer their services for cheap – especially at
the beginning of their careers. They fail to consider the operational costs of their business and/or
the ability to cover their monthly expenses throughout the year. In addition, some of them are
still stuck in the “employee” mindset.
According to a survey, one thing is certain: high qualifications and years of experience equal
higher hourly rates. However, good communication and negotiation skills can also affect
How to calculate freelance rates?
Firstly, your hourly rate calculation should take into account any and all monthly costs and
expenses that you as a freelancer might have. This includes both private expenses (e.g. rent,
food, clothes) and professional ones (e.g. office space, working materials, taxes).
According to survey, the average freelancer rate among IT professionals in 2020 is $94.28/hour.
While your own rate may differ, you can use this value as a basis for your own calculation.
Later on, we’ll take a closer look at the profiles of the freelancers who answered the survey –
predominantly working in SAP, consulting and management, IT infrastructure, development,
engineering, graphics, content, and media.
1 Calculate expenses
The first, most crucial part of defining your freelance rate is to calculate all your expenses.
Take into account any and all costs from less obvious ones such as internet fees, website hosting,
and software costs to more general costs such as rent, utilities, office equipment, legal and
accounting, taxes, insurance, etc.
Make a list of every little expense you incur as a freelancer.
It can be easy to forget small things such as the cost of office supplies, certifications, travel,
marketing, branding, etc, so make sure you make a note of these expenses as well.
In addition, your salary should be counted as an expense. Think of what would be your desired
income and add it to your expenses. Please note income taxes change a lot from country to
2 Calculate working days
Now, it is advisable to determine how many days per week, month, or year you are looking to do
Even if some freelancers often work through the weekend, this should not become the norm –
especially if you have a family waiting for you!
Additionally, friends that work as full-time employees usually only have time to meet up on the
weekends, so it’s important to have this time off for socializing (at least occasionally!)
In order to calculate how many working days you have available per year you must consider
potential sick days, days you’ll invest in further training, vacation days, etc.
In most cases, the number of days you get from your calculation will fluctuate.
To be on the safe side, we recommend you include a few extra days off rather than overestimate
your working days. This allows you to make smarter financial choices.
How to calculate the number of days of work available:
Calendar days 365
Weekends – 104
Bank holidays – 10
Vacation – 25
Sickness – 5
Total working days 221
As a result of our calculation, you have 221 days free for work each year. Considering an 8-hour
working day, that would be 1.768 hours/year 9 this calculation is just a sample).
But as a freelancer, you must also consider the time pursuing new clients, phone calls and client
communication, administrative work, etc.
Let’s say you can only spend 80% of your time actually working. That would be 6.4 hours a day.
221 days x 6,4 hours / day = 1.414 hours
3 Calculate your Minimum Acceptable Rate (MAR)
Once you’ve calculated your expenses and working days, it’s time to set your MAR – or
minimum acceptable rate. This is the absolute lowest hourly rate you would be willing to work
By analyzing your costs and workdays, you can calculate the MAR that best works for you.
While we do not recommend working for your MAR, this is a good starting point for freelancers
looking to get a foot into the freelancing world.
How do you calculate your MAR?
((living costs + overhead business costs + salary) / (hours worked a year)) + tax
Let’s run an example:
Expenses: $7,000 x 12 months = $84,000
Profit margin (salary): 25% = $21,000
Cost of doing business = $84,000 + $21,000 = $105,600
MAR: $105,000 / 1,414 hours = $74 per hour
This equation gives roughly your minimum hourly rate. As mentioned above, this is a good
starting point but it can always be hard to take into account all the different factors.
As you develop your freelance skills, you may increase your MAR to reflect your skills and