How much should I charge as a freelancer? Build your rate from costs, then price on value (2026)

Charge at least enough to cover the salary you want plus every cost an employer would normally carry for you, divided by the hours you can actually bill. That number is your floor. Then price above it on what the work is worth to the client. Most freelancers who undercharge get the first part wrong: they divide their target income by a full-time year of 2,080 hours and forget leave, tax, tools, payment fees and the hours spent finding work.

This guide walks through that maths with one hypothetical freelancer, shows what US employers pay the same roles so you can sanity-check your number, lists the self-employment taxes and payment fees that eat into each invoice, and covers how to move from a cost-based floor to value pricing. If you're pricing for a team rather than just yourself, read our guide to agency pricing models next.

Step 1: add up what a year has to cost

An employee's salary is only part of what they cost. The employer also pays their share of social taxes, paid leave, equipment and software, and the people who find the work. As a freelancer you cover all of that yourself, so your revenue has to as well.

Every figure in the example below is hypothetical, chosen to show the method. Swap in your own numbers.

Two costs scale with revenue, so treat them as a share of every invoice rather than a fixed line:

• Payment and currency fees, 3% in this example. The section on getting paid below shows why 3% is a middle estimate.
• A buffer for quiet months and late payers, 10% in this example.

Revenue needed = US$75,100 ÷ (1 minus 0.03 minus 0.10) = US$75,100 ÷ 0.87 = about US$86,300.

Income tax isn't a separate line because the salary equivalent is before tax, the same as an employee's salary. Self-employment taxes are different: they're the part an employer would otherwise share, so check them in the tax section below and raise the retirement or salary line if yours are high.

Step 2: count the hours you can actually bill

This is where most rate maths goes wrong. You don't bill every working hour, because a solo freelancer is also the sales team, the bookkeeper and the IT department.

Start with weeks. In the UK, almost all workers are legally entitled to 5.6 weeks of paid holiday a year, according to GOV.UK, and an employer can choose to count bank holidays as part of it. Our example takes 4 weeks of leave, 2 weeks of public holidays and 1 week of sick days, leaving 45 working weeks.

Then the billable share. Promethean Research, which benchmarks digital agencies, suggests a target of 70% to 90% billable for production staff and 60% to 80% for account managers (13 December 2021). Those are agency employees with someone else doing the selling. A freelancer who does their own sales and admin will usually sit lower, so our example uses 60%.

45 weeks × 40 hours × 60% = 1,080 billable hours.

So our hypothetical freelancer's floor is about US$80 an hour, or about US$640 for an eight-hour day. Track your time for a month before you trust any billable share, including the time you spend on proposals, calls and invoices.

What US employers pay the same roles

A useful check is what an employer pays someone to do the same work. The US Bureau of Labor Statistics publishes median pay by occupation. Its figures are for employees only: the BLS wage data doesn't include self-employed workers, so it's the client's in-house alternative, not a freelance rate.

The last column puts each median salary through the same assumptions as our example (10% retirement savings, US$9,100 of costs, a 13% buffer and 1,080 billable hours). It comes out at about 2.6 to 2.9 times the employee's hourly pay. That multiple is why a freelance rate that looks high next to a salary often isn't: the client is paying for someone they don't have to employ, equip or keep busy.

The self-employment taxes an employer used to share

These depend on where you're tax resident, not where your client is. Two examples:

• United States. The IRS sets self-employment tax at 15.3%: 12.4% for social security and 2.9% for Medicare. It's the self-employed version of the social security and Medicare taxes withheld from employees' pay, and you can deduct the employer-equivalent portion when working out your adjusted gross income. You file it on Schedule SE if your net earnings from self-employment were US$400 or more. Sole proprietors generally have to make estimated tax payments if they expect to owe US$1,000 or more when they file.
• United Kingdom. For the 2026 to 2027 tax year, GOV.UK sets Class 4 National Insurance at 6% on profits over £12,570 up to £50,270, and 2% on profits over £50,270. Class 2 contributions are treated as paid once your profits pass the threshold, and you can pay voluntary Class 2 at £3.65 a week below it.

For Australia, we couldn't open the ATO's super guarantee pages on 28 October 2026, so we haven't quoted the rate here. If you want your retirement line to match what an Australian employer pays, check the current super guarantee rate on ato.gov.au and use it in place of the 10%.

Whatever country you're in, move a share of every payment into a separate tax account as it lands. If you work from abroad, where you're tax resident decides which of these rules applies, which our guide to tax residency for remote founders covers.

What getting paid in another currency costs

If your clients pay in US dollars and you spend in another currency, fees come off every invoice. Here's what US$1,000 from a client costs to receive into an Australian account, from each provider's published Australian pricing on 28 October 2026:

That's why the example builds in 3%: it's between a bank-transfer route and a card or PayPal route. If your clients pay by card, use 5% to 7%. If a US client asks for a W-8BEN before paying you, our W-8BEN guide explains it.

From a cost floor to a value price

The cost maths tells you the least you can charge and still have a real business. It doesn't tell you what the work is worth.

Jonathan Stark, a former software consultant, argues in Hourly Billing Is Nuts that "as long as you bill yourself out by the hour, your clients will treat you as labor", and that hours "have nothing whatsoever to do with the outcome of the work". In practice that means:

• Ask what the result is worth to the client before you quote. A landing page that lifts sign-ups for a funded SaaS is worth more than the same page for a hobby project.
• Quote per project or per month once the scope is clear, and keep the hourly floor as a private check. If you get faster, a fixed price lets you keep the gain.
• Offer three options with different scope, so the client compares your options with each other instead of with the cheapest freelancer they can find.
• Package repeat work at a published price. Our guide to productised services has priced examples.

Living somewhere cheaper, such as Bali, lowers your floor. It doesn't change what the work is worth to a client in Sydney, London or San Francisco, or what their local alternative costs. Price to their market, and use the gap for savings, better tools or time to build your own product.

A quick checklist before you send a quote

1. Your rate covers salary, retirement, insurance, tools, admin, fees and a buffer, divided by honest billable hours.
2. It's checked against what an employer in the client's market would pay for the same role.
3. You've set aside the self-employment tax for your country of tax residency.
4. The quote says the currency, the payment method and who pays the fees.
5. Payment terms are written down. Our guide on getting clients to pay on time has wording you can use.

Rates are easier to set when you can ask people who've already done it. Remote Builders members compare pricing, clients and tools with other founders and freelancers who work from anywhere.