How Much Should I Charge? A Pricing Guide That Pays You Properly
Pricing is the question that quietly decides whether your business survives. Charge too little and you work flat out while staying broke. Charge in a way you cannot explain and clients push back. Most people pluck a number from the air, compare it to what a friend charges, and hope. There is a better way, and it is not complicated: work out the price that actually covers your life and your costs, sanity-check it against the market, pick a model that fits the job, and then say the number without flinching. Here is how, with the maths worked out in full.
How much should I charge per hour? The short answer
If you want the quick version: on a 50,000 income, a realistic hourly floor is about 64, not the 24 you get by dividing a salary by full-time hours. The gap is the whole point of this guide.
Your price has a floor and a ceiling. The floor is the rate that covers what you need to earn plus your business costs, spread across the hours you can realistically bill. The ceiling is what the market and the value of the work will bear. Your price lives between the two, and most people set it far too close to the floor, or below it.
Everything below is just those two numbers, worked out properly, plus how to present the result so it sticks.
Why almost everyone undercharges
The classic mistake is to take a salary you would like, say the equivalent of 50,000 a year, divide it by a full-time 2,080 hours, land on about 24 an hour, and quote that. It feels reasonable. It is also a quiet disaster, because it ignores two things: you do not bill every hour you work, and as your own boss you now carry costs an employer used to cover.
A freelancer or small operator spends a big chunk of every week on work nobody pays for directly: finding clients, quoting, admin, invoicing, learning, sick days and holidays. Bill 24 an hour on that basis and you end up earning far less than the job you left. The fix is to price from reality, not from a salary daydream.
Step 1: Work out your minimum hourly rate (the floor)
This is the number below which you are losing money, and you should almost never go under it. Three inputs, one division. Every figure below is in your own currency, so read 50,000 as whatever that means where you are.
1. What you need to pay yourself. The income you actually want to take home in a year. Say 50,000.
2. Your business costs. Everything you now pay that an employer used to: software, equipment, insurance, phone, accounting, a little marketing. Say 8,000 a year.
3. A buffer for tax and pension. You must set money aside for tax and your own retirement. A rough 25 percent uplift on your take-home covers it for this example, but it is only a placeholder: use your own effective tax rate.
Now the billable hours. A full-time year is about 2,080 hours (52 weeks times 40), but you cannot sell all of them. Take off five weeks for holidays and sick days, then assume roughly 40 percent of the rest goes to unpaid work (sales, admin, quoting). That leaves around 1,100 billable hours a year, and for many solo workers it is less.
Put it together: uplift the take-home for tax and pension first, then add your costs, because business costs are not taxed as income. So (50,000 take-home × 1.25) + 8,000 costs = 70,500 you need to bill. Divide by 1,100 billable hours and your floor is about 64 an hour. That is more than two and a half times the 24 figure most people would have quoted. If that feels high, that is exactly the point: the low number was never going to pay your bills.
These figures are an illustration, not tax or financial advice. Tax and pension rules differ by country, so plug in your own effective rate and check the detail with an accountant.
Step 2: Check the market (the ceiling)
Your floor tells you what you need. The market tells you what is possible. Spend an hour finding out what others charge for similar work, for similar clients, in your area or niche. Look at freelancer directories, rate surveys, competitor pricing pages, and simply ask peers. You are not copying them, you are placing yourself.
If the going rate is well above your floor, good, you have room to charge your worth. If the market sits below your floor, that is a signal: either the work is a commodity you should package or productise differently, or you are aiming at the wrong clients. Raising your rate is often about changing who you sell to, not just the number.
Step 3: Pick a pricing model that fits the job
How you charge matters as much as how much. The four common models, and when each one wins:
| Model | You bill by | Best for | Watch out for |
|---|---|---|---|
| Hourly | Time spent | Open-ended or ongoing work | It punishes you for being fast and caps your income at your hours |
| Day rate | Days booked | On-site work, or blocks of time | Spell out what a day includes, so it is not open ended |
| Fixed price | The deliverable | Work with a clear, agreed scope | Scope creep, so quote the exclusions too |
| Value based | The result for the client | High-impact work with a measurable payoff | Needs trust and proof, and a client who sees the value |
A good rule: the clearer the scope, the more you should lean towards a fixed price, because clients prefer certainty and you get rewarded for working efficiently. Use hourly only when the work genuinely cannot be pinned down, and even then, give an estimate with a range so there are no surprises.
What to actually say when you quote a price
Knowing your number is half the job. Saying it without apologising is the other half. The moment you justify, hedge or discount before anyone has objected, you train the client to push.
Present it flat and confident: "The project is [scope]. That is [price], fixed, and it includes [what is in]. It does not include [what is out], which we can add if you need it." Then stop talking. Silence is not your enemy here.
When they say it is too expensive, do not drop your rate. Change the scope instead: "I understand. Within a budget of [their number], here is what I would focus on: [smaller scope]." You protect your rate and give them a real choice. A price cut with the same scope just tells them your first number was made up.
When and how to raise your rates
Your rate is not set once. Costs rise, you get better and faster, and demand for your time grows. Review it at least once a year. The painless way to raise prices: quote the new, higher rate to every new client first, so the market sets it before you touch existing relationships. Once new clients are happily paying it, give your current clients fair notice that your rate is moving to match.
Tie the rise to value where you can. "From January my rate for this work is [new price]" is fine, but "I have added [new skill or result] and from January the rate is [new price]" lands better. Good clients expect your prices to climb as you get better. The ones who leave over a reasonable increase were usually the ones squeezing you anyway.
Turn your price into a quote that gets accepted
Once you know your number, the way you present it decides whether you win the job. A tidy, professional quotation that lists the scope, the price and what is included makes you look like the safe choice and gets the money conversation out of the way early. You can build one in a couple of minutes with a free quotation generator, and our guide on how to write a quote walks through the structure.
Make sure you are sending the right document, too: a fixed price you commit to is a quote, a rough figure is an estimate, and the difference decides whether you can charge more later. Our explainer on quote vs estimate vs quotation covers it. Then, when the work is done, carry that exact agreed figure straight onto the invoice, and if the client goes quiet, our guide to asking a client for payment has the words that get you paid.
