How to Price Freelance Work: 5 Formulas That Actually Work

Most freelancers underprice themselves. Not because they lack confidence — because they do the math wrong. They look at what they made at their last job and divide by 2,080 hours. That ignores taxes, unpaid time, and the weeks with no work. Here are five formulas that account for reality.

1. The Take-Home Reverse Formula

Start with what you actually want in your bank account after tax. Add your effective tax rate back. Add your business expenses (software, insurance, equipment). That's your required annual revenue. Divide by your realistic billable hours.

1,100 hours assumes 25 billable hours per week for 44 weeks. The rest goes to admin, sales, holidays, and sick days — which are real costs you no longer get paid for.

2. The Market Rate Anchor

Your minimum rate is a floor, not a price. Research what others charge for the same work on platforms like Glassdoor, LinkedIn Salary, and freelancer communities in your niche. If your minimum is £80/hr and market rate is £120/hr, charge £120. The market has already decided what the work is worth.

3. The Value-Based Multiplier

For project work, estimate the value you're delivering, not the hours you'll spend. A landing page that converts 2% better on £50,000/month in traffic is worth £12,000/year to the client. Charging £500 for that project is a bad deal for both parties — you're leaving money on the table, and they'll undervalue your work.

A rough rule: charge 10–20% of the annual value you're creating. For the landing page above, that's £1,200–£2,400 — not £500.

4. The Day Rate Formula

Clients often think in day rates. Convert your hourly rate to a day rate (multiply by 7–8), then quote slightly above it. This gives you room to negotiate while staying profitable. A £80/hr rate becomes a £600/day rate. Quote £650. If they push back, you have room to meet them at £600 without losing margin.

5. The Annual Raise Rule

Raise your rates 10–15% every year, or every time you start a new client relationship. Existing clients rarely notice small annual increases. New clients have no anchor — they accept your current rate as the baseline. Staying flat means you're effectively taking a pay cut every year after inflation.

The Number You Should Never Go Below

Calculate your absolute floor using the take-home reverse formula. Write it down. Never quote below it, even for "easy" projects or "great exposure." Below-floor work fills your calendar with unprofitable jobs and crowds out clients who would pay your real rate.

Use the calculator below to find your exact minimum based on your income goals, tax rate, and available hours.