How to Set Your Freelance Hourly Rate

Most freelancers set their rate by guessing or copying others — and quietly earn less than a salaried job. The right way is to work backwards from the income you need, counting only the hours you can truly bill.

The method

Hourly rate = (Target yearly income + Yearly business expenses) ÷ Billable hours per year.

The trap: billable vs working hours

You may work 40+ hours a week, but you cannot bill them all. Finding clients, writing proposals, emails, invoicing, learning, and gaps between projects eat 30–50% of your time. A realistic figure for many freelancers is 20–25 billable hours a week — and freelancers do not get paid leave, so count 46–48 working weeks, not 52.

A worked example

Target income Rs 1,200,000 a year, expenses Rs 100,000 (internet, electricity, software, device upgrades), 25 billable hours × 48 weeks = 1,200 hours. Rate = 1,300,000 ÷ 1,200 ≈ Rs 1,083 per hour, or about Rs 8,700 per day. Notice how much higher that is than dividing salary by 40-hour weeks — that gap is why underpricing is so common.

Refining it

Treat this as your floor, not your ceiling — specialist skills and strong outcomes justify more. For foreign clients, price against their market, not only your local one. And revisit the number twice a year: as your skills grow and expenses change, so should the rate.

Run your own numbers with the free Freelance Rate Calculator — income, expenses and billable hours in, your hourly and day rate out.