Hourly Rate
Exclude admin/marketing time.
Calculating Your Freelance Rate
Moving from a salary to freelance requires a mindset shift. You cannot just divide your annual salary by 2080 hours. You must account for unbillable time, taxes, and expenses.
The Billable Hours Trap
A full-time employee works ~40 hours/week. A freelancer works 40 hours/week but might only be billable for 20-25 hours. The rest is spent on:
- Marketing & Sales
- Accounting & Admin
- Learning new skills
The Formula
Hourly Rate = (Desired Annual Income + Expenses) / Billable Hours
Rule of Thumb: Take your desired salaried hourly wage and multiply by 2 or 3 to cover overheads.
FAQ
Should I charge hourly or fixed?
Fixed pricing (Value-Based Pricing) is usually better for experienced freelancers as it rewards efficiency. Hourly is safer for projects with undefined scope.