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Resources Articles How To Set Your Freelance Rate and Project Pricing

Work & Career Article 9 Min Read

Are you looking for the perfect formula that will tell you exactly how much
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Navigate the nuances of freelance pricing. Equip
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This guide will review pricing strategies and share best practices to help
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Sean Cope We’ll cover:

Published | May 28, 2024
Updated | May 28, 2024
Setting your rates: hourly, project or value-based pricing

Step by step guide to setting your freelance rates

Share:
Why is setting freelancer rates and prices so difficult?
What is the average freelancer rate?

Additional things to consider when setting your freelancer rate

How to raise your freelance rate on Upwork

Setting your rates: hourly, project or

value-based pricing
As a freelancer, how you price your work can have a huge impact on your
business. So before we get into the strategies for pricing your freelance
services, let’s look at the three most common pricing models: hourly
pricing, project-based (fixed) pricing and value-based pricing.
 Hourly pricing
Hourly pricing is the most common way new freelancers set their rate
because the model is quite simple. With this method, you come up with an
hourly rate for your work and multiply that by the number of hours spent
doing the work.

Examples of projectsFreelance jobs that can work well on an hourly basis

include customer service or virtual assistance.

Project-based (fixed) pricing

With this model, the freelancer charges a fixed rate for the entire project.
Instead of basing your fee on the number of hours spent working, your
payment is based on the result you deliver. This option is ideal for projects
with clearly defined deliverables. It also helps clients know exactly what to
expect a project to cost and helps the freelancer better anticipate their
expected earnings.

Examples of projects well suited for fixed-price contracts include web

design and mobile app development.

Value-based pricing
With a value-based pricing model, the freelancer charges a rate based on
the perceived value their service brings to clients. Implementing this
strategy requires a deep understanding of clients, their needs, budgets
and expectations. Then you set your price based on the impact you have
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For example, a digital marketing freelancer could adopt this model by

demonstrating the impact their marketing campaigns can have on the
Table of Contents client’s revenue. This isn’t a one-size-fits-all model and is usually best
suited to more experienced freelancers who can confidently demonstrate
the value they bring to client projects.

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Step-by-step guide to setting your

freelance rates
Setting your rate as a freelancer can feel confusing, exciting,
overwhelming and confidence-boosting all at the same time. You’re
Create your freelance Find
Create your freelance Find
excited to have
Workyour freelance business going but you also want to make
profile today sure you don’t put clients off with your rates. Regardless of the pricing
model you choose, this straightforward guide will help you arrive at a rate
that makes you feel good and is fair for you and your clients.

1. Ask yourself these basic questions before you

start
Consider the following questions when thinking about setting your
freelancer rate. Reflecting on the answers can help you identify the
factors that will define your pricing strategy:

How much money do I need to make to support my lifestyle?

How much money do I want to make as a goal?

What do other freelancers charge for similar services?

How much money would I make as a full-time employee?

What expenses do I have as a freelance business owner?

Are my skills in demand?

How much value am I bringing to the client?

2. Set your annual salary goal

Are you supporting yourself or a family? Do you have money saved up, or
do you need your income to pay for your living expenses? Freelancing can
supplement an existing income or provide a full-time income.

By understanding how much you need to make and how much you want to
make, you’ll work backward to find your freelancer rate. Pick a yearly
salary, and then you can use this to calculate how many working hours
you’ll need to get to that salary.

For example, a $50,000/year salary breaks down like this:

$50,000/year (before taxes)

Working 40 hours/week (5 x 8 hour days)

4 weeks off for vacations, sick days, and unexpected absences

= 48 working weeks x 40 hours week = 1920 working hours

= $50,000 / 1920 hours = $26 per working hour

But, this rate considers all of your working time as billable hours. In reality,
many activities require time that you don’t get paid for, such as
administrative tasks, invoicing/billing, replying to emails, prospecting and
finding new clients, marketing, and more. That leads to the next step.

3. Consider the number of billable hours you

need to work
While each situation is different, freelancers’ average hourly breakdown is
60% billable hours and 40% non-billable hours. When calculating your
freelancer rate, you can adjust this ratio to match your expectations and
processes.

If we are allocating a total of 1920 work hours from the calculations above,
how much of that time will be billable vs. non-billable time? Using the
60%/40% as a baseline, we can recalculate the hourly rate using only the
billable hours:
= 1920 hours x 60% = 1152 billable hours (+ 768 non-billable hours)

= $50,000 / 1152 billable hours = $43.40/hour

As a freelancer, you'll have to balance the best way to use your time. Do
you want to pursue a larger number of projects at a lower rate or a smaller
number of projects at a higher rate? Understanding the amount of billable
time for a project will help you calculate if it makes sense relative to the
number of non-billable hours required to get that project. You can also
increase your rate for smaller projects and provide a discount for more
significant or long-term projects.

4. Incorporating freelancer expenses into your

price
As a freelancer, you'll have business expenses that must be accounted for
in your rate. List out all of your costs and total them up. You will need to
add this number to your salary goal and increase your hourly rate to cover
these expenses. Below are some of the standard costs that freelancers
should consider:

Insurance and licenses

Taxes

Examples of projects
Equipment

Office space or rent

Software subscriptions

Marketing and advertising costs

Freelance platform fees

If these expenses total $10,000/year, your annual goal needs to go up to

$60,000, and your hourly rate increases to $52 ($60,000/1152 billable
hours).

If your freelancing hourly rate is higher than you would be paid for a
regular salary, that’s OK. Clients typically expect to pay a little more for
freelance services because many other costs shift to the freelancer. As a
freelancer, you’re responsible for the additional expenses associated with
running and growing your freelance business. Plus, your client doesn’t pay
for employment taxes and benefits as they do for full-time employees.

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5. Know the market rate for your services

Now that you have a rate that covers your salary goal and expenses, it’s
time to compare this hourly rate to the market. What are other freelancers
charging for a similar service?

To find this information, do some research and look at your competitors’

rates. On Upwork or sites like Glassdoor, you can get an idea of
freelancers’ hourly rates. You can also check out this article to learn how
much freelancers make in various industries.
If your rates seem consistent with the other freelancers in the market, you
have a good starting place. If the rate you are looking to charge is too high,
you may need to reevaluate your expenses or salary goals. If the rate is
too low, then you may be undervaluing your skill set.

6. Understand your value

You should know your value to make sure you’re charging a reasonable
price for your services. Anchor your price point based on the value you
provide to the client. How do you put a value on the knowledge you’ve
learned, the skills you’ve developed, and the services you offer to clients?
One way to determine your value is to reflect on your experience, skill
level, and past work portfolio.

Expertise is an investment, not an expense. Naturally, the more

experience you have, the more you can charge for your time. A freelancer
with 10 years of experience as a web developer will be able to charge
more than a freelance web developer with two years of experience.

The rarity and complexity of your skill set will play a role in your pricing
strategy as well. A freelance programmer proficient in three different
coding languages will be able to charge more than a programmer with the
same level of proficiency in a single coding language. If you can
demonstrate the level of quality and return on investment, you’ll be able to
set a higher price for your services.

Bonus step: Use Upwork’s

Freelance Rate Calculator
If you want a straightforward starting point to help you figure out your
hourly freelance rate, take advantage of Upwork’s freelance rate
calculator. The calculator is designed to help you build a base rate that
considers your estimated monthly expenses and your desired hours to
work.

This tool is intended to help you calculate a minimum freelance hourly rate
based on the information you provide. The estimation is meant to be an
initial step in your journey to determining your rate.

Why is setting freelancer rates and

prices so difficult?
All freelancers face the question of how much to charge. But setting
prices isn’t a challenge exclusive to new freelancers. Your pricing strategy
is a delicate balance that requires understanding your value, target
clients, and the larger competitive market. If you set your rates too low,
then you could be leaving money on the table and not getting paid for the
value that you offer. In contrast, if you set your rates too high, then you
may lose projects to other freelancers with a lower rate.

Thankfully, as a freelancer, you have the freedom and flexibility to change

your rates. It’s essential to occasionally reevaluate your rates to ensure
they stay consistent with the value provided while remaining competitive
within the market. You can even include an automatic scheduled rate
increase in your project proposal on Upwork.

So, don’t overthink it. The price you set isn’t written in stone. Throughout
this article, you’ll learn strategies and tips to help you identify a price that
you’re comfortable charging.

What is the average freelancer

rate?
As you already know, the average freelancer rate varies greatly depending
on your area of work, experience, geographical location, and many other
factors.

Here are some rate estimates for popular freelance jobs. All prices are in
USD.

Writers: $30-$40/ hour

Web developers: $50-$60/ hour

Graphic designers: $40-$45/ hour

Digital marketers: $35-$50/hour
Data analysts: $55-65/ hour

Virtual assistants: $20-$35/ hour

Additional things to consider when

setting your freelancer rate
In addition to what we discussed above, you also want to consider a few
other factors when setting your freelance rate.

Project complexity
Not all projects are equal. A complex project will have stricter
requirements and utilize more advanced skills, which means you can
charge a higher rate for that project.

Education
An advanced degree or industry certification may enable you to charge
more for your services.

Geographic location
Upwork’s work marketplace allows freelancers to connect with clients
around the world. But, when it comes to setting your prices, it’s helpful to
consider the standard rates in your client’s location. Generally, a client in
Venezuela may not pay the same price as a client in Japan, so it’s crucial
to tailor your prices to the area you serve.

Talk to your clients

Client communication is crucial. You need to understand the client’s goals
and how your project fits into their bigger picture. This will help you set
your expectations and know how to tailor your pitch to suit them. Effective
communication will help you identify ways to provide more value or
expand your service offering.

Don’t forget why you’re freelancing

Your freelancing rates should empower you. If your rates aren’t giving you
the lifestyle, freedom, and income you want, it may be time to change your
pricing strategy or reexamine how you create value for your clients.

How to raise your freelance rate on

Upwork
Every job you complete successfully helps build your reputation as a
skilled freelancer. As you hone and improve your skills, make sure your
Upwork profile reflects this. As the demand for your freelance services
grows, you can slowly raise your rate.

When a client posts their project on Upwork, they evaluate freelancer

proposals based on their profile and look for:

Talent badges
Job Success Scores

Client reviews
Portfolios

Your profile grows with you. If you work hard to make sure your clients are
happy, you'll gain positive reviews and talent badges, and your Job
Success Score will increase. You'll also have more work samples in your
portfolio to show potential clients. All of this helps highlight your value to
clients, and can empower you to negotiate better rates for your services.

How do you know when it's time to raise your

rates?
Think about supply and demand. As the demand for your services
increases, so should your rates because you have less supply (your time).
Adding new skills or earning a talent badge can also help justify your rate
increase for new clients.

Your rates should be competitive but still fair to you and your clients. You
could risk scaring off clients if you get out of the competitive range.
Clients expect a freelancer's rate to be justifiable based on their
experience and expertise.

You could start slowly and raise your hourly rate a dollar or two every five
or ten client projects you finish (depending on length and complexity). If
you find that you don't have time in your schedule for new clients and you
have invites to interview clients in your inbox, try raising your rate by five
or even ten dollars.

When submitting a proposal, you have the option to include a scheduled

rate increase with a specific amount and frequency to your hourly rate.
You don't have to worry about asking to increase your hourly rate, which is
great for long-term contracts.

Choose a percent increase from the drop-down or set a custom amount

along with how often it will automatically increase. If the client extends an
offer, they can accept your proposed automatic rate increase, or modify it
in their offer. Once you accept a client's offer, the rate increase terms
cannot be changed. The scheduled rate increase is only available for new
contracts, so you’ll want to add this in your initial proposal or when you
start a new contract with a client.

Boost your freelancer income with

Upwork
As a freelancer, you’re in control of deciding how much to charge for your
time, attention, and skill set. There are many considerations when setting
your rates. You can reflect on the questions posed in this article, use the
annual salary calculation, review your competitors’ rates, and adjust
based on the value you provide. If you need more tips, check out the
Setting Your Rate course from the Upwork Academy.
But, the most important thing to remember is that your rate isn’t
permanent. Pick a freelancing rate you’re comfortable with, and try it. The
market and prospective clients will let you know if that pricing strategy
matches your service’s value. You can change your rate as you gain
experience, improve your services’ value, and as your income goals
evolve.

Ready to give your freelance income a boost? Thousands of projects are

posted on Upwork’s work marketplace each day. Create your profile to get
started on Upwork. Then, set your freelancer rate, start applying to
projects to see how potential clients respond to your pricing, and go from
there. Sign up to Upwork and get started today.

Author Spotlight

Sean Cope
SEO Writer

Formerly a full-time in-house marketing director, Sean Cope

began building an SEO and content creation company by
freelancing on Upwork. He has enjoyed working with clients
in various industries, leading them to achieve their business
goals and higher Google search rankings. Sean is
passionate about helping new clients in growing their
businesses through search engine optimization, content
writing, and digital marketing.
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