How to Calculate Your True Freelance Hourly Rate

One of the biggest mistakes new freelancers make is calculating their hourly rate based on a standard 40-hour workweek. They take their desired monthly income, divide it by 160 hours, and call it a day. This is a surefire way to burn out and go broke.

The Unbillable Hours Reality

Unlike a traditional employee, you are not paid for every hour you sit at your desk. You have to account for:

• Finding and pitching to clients
• Answering emails and administrative work
• Invoicing and accounting
• Updating your portfolio and continuous learning

A successful freelancer typically bills only 20 to 25 hours per week. The rest of your time is spent running the business.

Don't Forget the Overheads

When you work for a company, they pay for your internet, software licenses, laptop, and office space. As a freelancer, these are your business expenses. Your hourly rate must absorb these costs.

How to Price Correctly

Instead of guessing, use a reverse-engineering approach. Start with your desired net income, add your monthly expenses and estimated taxes, and divide that total by your true billable hours.