When someone asks about your day rates, do you freeze up for a moment, start mentally retracing what you got paid in your last job, tack on a little extra, and hope it sounds reasonable? 

You’re definitely not alone! Figuring out your charging rates is a rite of passage for pretty much every one moving from the employed world to self employment.

Before diving into the debate about whether you should even be charging by the hour or day (spoiler: there are plenty of arguments against it), let’s talk about how you can calculate a freelance rate that truly reflects a sustainable return that will cover your financial wants and needs  - and keep you in business going forward.

The truth is, freelancing isn’t just about converting a salary into an hourly rate and calling it a day.

There’s much more to consider. As a freelancer or self employed consultant, you are now responsible for your entire business. That means you need to ensure your rates cover more than just the time you spend working with clients.

To create a rate that’s sustainable and ensures you don’t end up working for peanuts (and burnout), here are some  of the key  - but often forgotten - elements you need to also ‘bake in’ to your pricing:

 🧁 Business Expenses

Running a freelance business comes with costs that you might not have had to think about if you were  previously employed. Things like office supplies, software subscriptions, computer equipment, your internet connection, phone bills, and maybe even renting office space—all of these are now your responsibility.

These expenses can add up quickly, and they should be factored into your rate to keep your business running smoothly. 

🧁 Self-Employment Taxes

Ah, taxes. As an employee, taxes were likely deducted from your pay check without much fuss. But as a freelancer, you’re on your own. You’ll need to account for income tax, national insurance contributions, and possibly other business-related taxes.

It’s crucial to set aside enough from your earnings to avoid an unpleasant surprise when tax time rolls around!

🧁 Pension and Benefits

One of the biggest perks of being employed is having access to company benefits like health insurance, pension contributions, and other perks. As a freelancer, it’s on you to arrange for these yourself.

Whether it’s setting up a private pension plan, purchasing health insurance, or ensuring you have some sort of safety net in place, these are essential costs that you should factor into your rate.

🧁 Sick Days and Holidays

Freelancers don’t have the luxury of paid time off. If you take a day off because you’re sick, or you want to go on vacation, that’s technically 'unpaid' time. But practically you'll want to ensure you have the cashflow that enables you to take these breaks.

So, it’s important to build a buffer into your rates to cover the inevitable days where you’re not working—whether that’s due to illness, holidays, or public holidays when your clients might not need you. 

🧁 Admin and Marketing Time

Working for yourself means more than just doing the work for your clients. There are plenty of other tasks that take up time, such as invoicing, bookkeeping, managing your schedule, and marketing your services to attract new clients.

These non-billable activities are still a vital part of running your business, so you need to make sure your rate covers you to be able to spend time on these essential activities (or outsource them).

🧁 Professional Development and Investments

For you to remain the go to choice - staying competitive and up to date with your knowledge is key. Investing in yourself through training, courses, attending industry events, or upgrading your skills (or equipment) is essential.

Unlike an employee, whose company might pay for this, freelancers need to budget for their own professional development and training. Think of it as an investment in your future earnings!

All of these moving parts can feel overwhelming at first, but trust me—building a rate that supports your business and your life is worth the effort. 😭

If all of this sounds like a bit too much to juggle on your own, I’ve got your back!

Free Rates Calculator

Check out my handy FREE rates calculator, designed to walk you through each step and make sure you’re covered on all fronts. It’s your one-stop tool to ensure you set a rate that’s fair, realistic, and sustainable. 

It takes as little as just a few minutes to complete with nothing that you have to download.

BONUS: You can go one step further! As once you have worked out your charge rate - you'll also receive a link to download my project pricing template. This is designed to help you build up your quote from an hourly or day rate to a full project price or estimate to drop into your proposal.

So, next time someone asks you for your freelance rate, or to price up a project you’ll be able to respond with confidence—and without panic!