The Method: your freelance hourly rate on numbers, not gut feeling

Most freelancers name a price out of thin air — «eh, that sounds about right» — then wonder why there's never any money left.

Your freelance hourly rate isn't magic, and it isn't «whatever feels fair». It's simple math: how much you need to live, how many hours you actually work, how much tax eats, and how much you want on top. Let's walk through how to price design work step by step — so you understand every number and never work at a loss.

1. How much you need

Start with what's easy to name: how much you need to live each month, net, after tax.

Rent, food, transport, subscriptions, something for savings — all of it. Say €8 000 a month. Multiply by 12 → €96 000 a year. That's your yearly target.

Got other income — a part-time salary, rent, any steady cash flow? Enter it. It lowers how much freelance work has to earn.

2. Billable hours

Not «how many hours are in a year», but how many of them you can actually sell.

• Months off. Vacation, sickness, burnout. Say 2 months → 10 working months left.
• Billable hours per month. Not hours at your desk — hours you'll actually put on an invoice. Usually 80 hours, not 160. → 800 billable hours a year.

Be honest. Inflate your hours and your rate comes out artificially low — and you'll grind harder to hit the same target.

3. Adjustments

Reality makes its corrections.

• Unpaid hours. Hours you did invoice but never got paid for: the client ran out of money, the project fell through, the work was cancelled. Say 5%.
• Tax. Three ways to enter it: «I know the %» — a flat rate on revenue; «Data» — last year's revenue + tax paid → your real effective rate; «Amount» — a fixed yearly sum. Tax pushes your rate up, because the rate has to cover it — otherwise you pay it out of pocket.
• Retro data (optional) — money you've already earned this year before you started tracking.

4. Margin

This is what gets added on top of cost.

Without margin, your rate only covers your living costs — no savings, no cushion, no growth, no buffer for «the client vanished». Margin is your profit and your safety net. Build in 20–30% and you sleep better.

5. Time structure → the structural multiplier

The non-obvious part, and the most important one.

You don't spend 100% of your time on billable work. You also sell, write emails, do marketing, manage money, dig through your inbox. All of it is your time — and nobody pays for it directly.

Say only 50% of your time is actual production (the stuff you invoice). Then your billable hours have to pay for all your time → your production-hour rate gets multiplied by 1 / production share. At 50%, that's ×2.

That's why a solo specialist who does everything has to charge more per hour than it first looks. You're paying yourself for the invisible half of the work too.

The full formula

• Cost per hour = yearly expenses ÷ billable hours per year
• Hourly cost with tax = cost per hour × tax multiplier
• Hourly rate = hourly cost with tax × structural multiplier × (1 + margin)
• Freelance revenue = rate × billable production hours
• Yearly profit = revenue − tax − expenses

The bar at the bottom splits gross revenue into three parts that add up to 100%: Tax % (to the state), Expenses % (to living), Net result % (stays with you). You see at a glance where the money leaks.

6. Recommendations: how to close the gap

Enter your current rate — and the tool shows the gap between what you charge now and what you should be charging. Plus three ways to close it:

• Raise your rate. Straight and honest: you did the math, now charge it.
• Work more billable hours at your current rate. If raising the rate feels scary, make it up in volume.
• The combo — raise your rate halfway and add some hours. Usually the most realistic path: no scary jump that spooks clients, no burnout.

What's next

Save your rate — it becomes the reference point for everything else: what to charge per hour, how much to close each month, whether you're on track. Come back whenever your costs or plans shift. A freelance rate isn't a life sentence — it's a living number that grows with you.

Now you know how to price your work on numbers, not gut feeling. The rest is up to you.

A rate only works together with hours: until they are logged, there is nothing to compare it with. How that works — see the timer.

Next: how the numbers work, why log hours at all and all the guides.