Guide
How to set a freelance day rate that actually covers what you need
A practical guide to calculating a floor rate, building in overhead and margin, and avoiding the trap of undercharging for invisible costs.
Start with what you need to earn, not what feels comfortable to charge
The most common mistake is setting a rate based on what seems socially acceptable rather than what the business actually needs. Work out your target income, add your annual overhead, and divide by your realistic billable hours. That is your floor — the rate below which you will eventually run out of money.
Billable hours are always fewer than you think
Admin, business development, professional development, sickness, and gaps between contracts all eat into the hours you can actually bill. If you work a 40-hour week, assume 25–30 of those are billable on a good week. Then subtract holiday, sick days, and slow periods. A realistic total of 900–1,100 billable hours per year is common for full-time freelancers.
Overhead is business cost, not personal cost
Software, insurance, accountancy fees, equipment depreciation, and home office costs are overhead. They come on top of your income target, not inside it. If you forget them, you will earn less than your target every year without understanding why.