How To Charge Per Hour When Freelancing

Are you a freelancer looking to determine the best way to charge per hour for your services? In this article, we will explore different strategies to help you accurately price your work and ensure that you are being properly compensated for your time and expertise. From understanding your market value to factoring in expenses, we will provide practical tips and actionable advice to help you navigate the world of hourly rates as a freelancer.

Calculating your hourly rate

Consider your desired annual income

When determining your hourly rate, it’s important to start by considering your desired annual income. Determine how much money you would like to make in a year, taking into account your personal financial goals and lifestyle expenses. This will serve as the foundation for calculating your hourly rate and ensure that you are charging enough to meet your needs.

Calculate your business expenses

In addition to your desired annual income, you need to account for your business expenses. These can include expenses such as office rent, utilities, equipment, software subscriptions, insurance, and marketing costs. Calculate your total annual business expenses and divide it by the number of billable hours you anticipate working in a year to determine how much you need to charge per hour to cover these expenses.

Determine your billable hours

Next, you need to determine how many billable hours you can realistically work in a year. Take into consideration factors such as vacation time, holidays, and weekends when calculating your billable hours. Remember, not all the hours in your workday will be billable, as you will also need to allocate time for administrative tasks, marketing, and client communication. Subtract non-billable hours from your total work hours to determine your billable hours.

Add a profit margin

Finally, it’s important to add a profit margin to your hourly rate. This is the amount you want to earn on top of your desired annual income and business expenses. Consider factors such as the level of risk in your industry, your level of expertise, and the value you bring to your clients’ projects. Adding a profit margin allows you to save for the future, invest in your business, and ensure financial stability as a freelancer.

Understanding the market

Research industry standards

To determine a competitive hourly rate, it’s crucial to research industry standards. Look at what other freelancers with similar skill sets and experience are charging for their services. This will give you a baseline to work from and help you understand the market rates for your industry. Keep in mind that rates may vary depending on location, so take that into account when comparing to ensure you are charging a fair rate.

Analyze your experience and expertise

When setting your hourly rate, consider your level of experience and expertise in your field. If you have been freelancing for many years and have a strong portfolio and a satisfied client base, you can justify charging a higher rate. On the other hand, if you are just starting out or have less experience, it may be necessary to charge a lower rate initially to attract clients and build your reputation. As your skills and experience grow, you can gradually increase your hourly rate.

Consider the demand for your services

Another important factor to consider when setting your hourly rate is the demand for your services. If you specialize in a niche area or offer unique skills that are in high demand, you may be able to command a higher rate. Conversely, if there is an oversaturated market for your services or if clients have many options to choose from, you may need to adjust your rate accordingly to remain competitive.

Assess your competition

Take the time to research and assess your competition. Look at the freelancers or agencies offering similar services and analyze their pricing strategies. This is not to say that you should simply copy their rates, but rather to gain insight into how they position themselves in the market. Understanding your competition will help you find a pricing strategy that distinguishes you from others and highlights your unique value proposition.

Factors to consider

Level of expertise

Your level of expertise plays a significant role in determining your hourly rate. If you have years of experience and possess specialized skills, you can justify charging a higher rate. Clients often value expertise and are willing to pay more for it. Conversely, if you are just starting out or do not have extensive experience, it may be necessary to charge a lower rate initially to build your reputation and gain valuable client testimonials.


Specializing in a specific field or niche can give you a competitive edge and allow you to charge higher rates. By positioning yourself as an expert in a particular area, you can attract clients who are specifically looking for someone with your expertise. Clients are often willing to pay a premium for specialized knowledge and skills that directly address their unique needs and challenges.


Location can also impact your hourly rate. Freelancers in major cities where the cost of living is higher often charge higher rates compared to those in smaller towns or rural areas. Take into account your local market and adjust your rates accordingly. Keep in mind that even if you are located in an area with a lower cost of living, you can still charge competitive rates if you offer valuable skills and expertise.

Client budget

Consider the budget of your target clients when setting your hourly rate. While it’s important to value your time and expertise, it’s also crucial to be mindful of your clients’ financial limitations. Understanding your clients’ budgets can help you strike a balance between charging a fair rate and attracting clients who are willing to pay for your services. Offering different pricing options, such as project-based or retainer-based pricing, can also allow you to accommodate clients with varying budgets.

Different pricing models

Hourly rate

Charging an hourly rate is one of the most common pricing models for freelancers. With this model, you charge clients based on the actual time spent on their projects. It provides a transparent breakdown of your work and ensures that clients pay for the specific hours you dedicate to their tasks. Hourly rates work well for ongoing projects that may have changing scopes or require flexibility.

Flat fee

A flat fee pricing model involves charging clients a fixed amount for a specific service or project. This pricing model is often used when the scope of work is well-defined, and you have a clear understanding of the time and effort required. Flat fees provide predictability and allow clients to have a clear understanding of the total cost upfront. However, it’s essential to carefully evaluate the scope of work to ensure that you are charging a fair price that adequately compensates you for your efforts.


A project-based pricing model involves setting a predetermined price for an entire project or specific deliverables. This model is suitable for projects with a clearly defined scope, and the time and effort required to complete the project can be estimated accurately. Project-based pricing allows you and your clients to have a clear understanding of the overall cost and project timeline.


Charging a retainer fee involves billing clients a fixed recurring amount for a set number of hours per month or for ongoing access to your services. Retainers can provide stability and predictable income for freelancers and ensure long-term client relationships. Retainers are often used for clients who require ongoing support or have a consistent need for your services. This pricing model allows you to allocate a set number of hours each month to the client, giving them a sense of priority and dedicated attention.

Benefits of charging per hour

Flexible for ongoing projects

Charging per hour offers flexibility for ongoing projects that may evolve or have changing scopes. With an hourly rate, you can easily adapt to the project’s changing needs and adjust the number of hours you dedicate accordingly. This flexibility ensures that you are appropriately compensated for the additional time and effort required as the project progresses.

Accurate payment for time spent

One significant advantage of charging per hour is that it provides an accurate measurement of the time you spend on a project. This ensures that you are compensated fairly for the actual hours worked. By charging per hour, you eliminate the risk of over- or underestimating the effort required and ensure that your clients understand the value they receive in exchange for their payment.

Adjustable with scope changes

Projects can often change scope or evolve over time. Charging per hour allows you to adjust your pricing accordingly and ensure that you are fairly compensated for the additional work required. When changes arise, you can discuss them with your clients and agree on an updated hourly rate, ensuring that both parties are satisfied with the adjustments.

Potential drawbacks of charging per hour

Clients may perceive it as inefficient

Some clients may perceive charging per hour as an inefficient pricing method, as they may worry about potential time-wasting or dragging out a project to increase billable hours. To overcome this concern, it’s essential to be transparent with your clients about the progress you are making and the value you provide. Regularly communicate your work updates and demonstrate your efficiency and effectiveness to build trust and alleviate any concerns about hourly billing.

Limited earning potential

Charging per hour may limit your earning potential, especially if you’re unable to increase your hourly rate as your skills and experience grow. As a freelancer, it’s crucial to continually evaluate and reassess your rates to ensure that you are charging a fair amount that adequately reflects the value and expertise you bring to your clients’ projects.

Difficulty in estimating project cost

Estimating the total cost of a project when charging per hour can be challenging, especially if the project’s scope is not well-defined or if there is uncertainty about the time required. This uncertainty can make it difficult to provide accurate estimates to clients. To mitigate this challenge, it’s important to communicate openly with your clients about project expectations and to regularly provide progress updates to ensure transparency.

Methods for tracking hours

Time tracking tools

Using time tracking tools can help you accurately track and record the hours you spend on different tasks and projects. These tools provide a digital record of your time, making it easier to generate accurate invoices for your clients. Many time tracking tools also offer features like project organization, reporting, and integrations with billing systems, streamlining your freelance workflow.

Manual timekeeping

If you prefer a more hands-on approach, manual timekeeping can also be an effective method for tracking hours. This method involves tracking your time using a physical timer, spreadsheet, or other means of tracking your tasks and the associated time spent on them. Though slightly more labor-intensive, manual timekeeping allows you to have complete control over your time tracking process and can be particularly helpful for complex or multifaceted projects.

Developing a routine

Regardless of the method you choose, developing a routine for tracking your hours is essential. Set designated times to record your time, whether it’s at the end of each day or at the completion of specific tasks. Consistency is key to ensure accurate and timely tracking. Establishing a routine will also help you stay organized and have a clear record of your billable hours.

Communicating your hourly rate

Confidence and transparency

When communicating your hourly rate to clients, it’s important to convey confidence and transparency. Clearly state your rate upfront, along with the services and value you provide. Confidence in your pricing conveys professionalism and establishes trust with your clients. Be transparent about your rates, leaving no room for confusion or misunderstandings.

Justifying your rate

Clients may question or challenge your hourly rate, especially if they’re comparing it to lower-priced alternatives. Be prepared to justify your rate and explain the value you bring to their projects. Highlight your expertise, experience, and the track record of successful projects you’ve completed. Demonstrating the value you provide can help clients understand why your hourly rate is justified.

Explaining the value

In addition to justifying your rate, it’s important to clearly articulate the value clients can expect from your services. Explain how your expertise and unique skills will contribute to their project’s success and the impact it will have on their business. Clients are more likely to accept your rate when they understand the value they will receive in return.

Negotiation and compromise

Keep in mind that negotiations may be necessary when discussing your hourly rate with clients. Some clients may have budget constraints or may be looking for a lower-priced option. Be open to exploring compromises and finding a pricing structure that satisfies both parties. Consider offering alternative pricing models, such as flat fees or project-based rates, to accommodate clients’ needs while still ensuring that you are fairly compensated for your time and expertise.

Navigating client negotiations

Understanding the client’s budget

Before entering into negotiations, it’s essential to have a clear understanding of your client’s budget. This will help you tailor your pricing proposal to their financial limitations. Ask strategic questions to gauge their budget early in the discussion, allowing you to present pricing options that align with their financial expectations. By being aware of their budget, you can strike a balance between your desired rate and their financial constraints.

Negotiating additional benefits

If a potential client is hesitant about your hourly rate, consider negotiating additional benefits that can justify your rate. This can include offering additional services, such as extended customer support, expedited turnaround times, or bundled services at a discounted rate. By providing added value, you can alleviate concerns about pricing and increase the perceived value of your services.

Handling scope creep

Scope creep, or the expansion of a project beyond its original scope, can often lead to conflicts over pricing. To navigate scope creep, clearly define the project scope and deliverables at the outset, and communicate any additional work or changes that fall outside the agreed-upon scope. Addressing scope changes promptly and discussing the associated time and cost implications will help you maintain a positive client relationship and ensure that you are compensated fairly for any additional work required.

Evaluating and adjusting your rate

Regularly reviewing your rate

It’s important to regularly review and evaluate your hourly rate to ensure that it remains aligned with market standards and your level of expertise. Monitor industry trends and changes in the market to ensure that your rate is competitive. Consider reviewing your rates at least once a year, or whenever there are significant changes in your skillset or the scope of your work. By regularly evaluating your rate, you can confidently adjust it to reflect your current value and expertise.

Considering feedback from clients

Client feedback can be a valuable source of information when evaluating and adjusting your rate. Listen to your clients’ feedback on the value they perceive in your services and the impact it had on their projects. Positive feedback and client satisfaction can indicate that your rate accurately reflects the value you provide. On the other hand, if you consistently receive feedback that your rate is too high, it may be necessary to reevaluate and adjust accordingly.

Adjusting for market changes

The market is dynamic, and changes in supply and demand can impact pricing structures. Stay informed about market changes, including shifts in demand for your services, industry trends, and competitive pricing strategies. When necessary, be willing to adjust your rate to remain competitive and ensure you are adequately compensated for your time and expertise. Regularly evaluating the market landscape will help you make informed decisions when adjusting your rates.

Recognizing your value over time

As you gain more experience, develop new skills, and establish a strong reputation, recognize that your value as a freelancer increases over time. Adjust your rate accordingly to reflect your growing expertise and the value you can deliver to your clients. By acknowledging your value and regularly increasing your rates, you position yourself as a professional in your field and ensure that your income reflects your hard-earned expertise.

In conclusion, calculating your hourly rate as a freelancer requires considering factors such as your desired income, business expenses, billable hours, and profit margin. Understanding the market and factors such as your expertise, specialization, location, and client budgets will help you set a competitive rate. Different pricing models, including hourly rates, flat fees, project-based pricing, and retainers, have their own benefits and drawbacks. Efficiently tracking your hours and effectively communicating your rate to clients are essential skills to master. Navigating negotiations with clients, evaluating and adjusting your rate over time, and recognizing your value will help you thrive in your freelancing career.