Setting a Price for Your First Freelance Work

The hardest part of a first freelance job is not the work. It is the moment somebody asks what you charge. Price too low and you resent the project halfway through; price without a reason and you cannot defend the number when it is questioned. This post is a way to arrive at a figure you can say out loud, and the reasoning that lets you adjust it later.

This is general information about how to think about pricing, not tax or legal advice. Rules about registration, invoicing and tax differ by country, so check what applies where you live before you invoice anyone.

Your rate is not your salary divided by working hours

The most common mistake is to take a monthly salary, divide by the hours in a month, and quote that. It undercounts in three directions at once.

• Not all your hours are billable. Finding clients, quoting, invoicing, chasing payment, bookkeeping and learning are all real work that no client pays for directly. Freelancers often bill a good deal less than half of a working week, especially in the first year.
• An employer pays more than your salary. Pension contributions, insurance, paid holiday, sick leave, equipment and software all sat on someone else's budget. Now they sit on yours.
• Income is uneven. A quiet month still has fixed costs. The rate has to cover the gaps as well as the busy weeks.

Build a floor from your own numbers

Start with what you need rather than what you hope for, because the floor is the number you must not go below. Add up, for a year:

• What you need to take home, after tax.
• Business costs: software, hardware, insurance, accountant, workspace, phone, travel, training.
• Money set aside for tax and, where it applies, for pension and social contributions.
• A buffer for quiet months and for time off, including days you are ill.

Then estimate the billable hours you can realistically sell in that year. Take the weeks you intend to work, the hours per week you can actually concentrate for, and the share of those hours that are billable. Be pessimistic; you can raise the estimate once you have evidence.

Divide the total by the billable hours. The result is not your price. It is the point below which the work costs you money, which is a different and far more useful thing to know.

Find out what the market pays

The floor tells you what you need. The market tells you what is possible. Look at published rate surveys for your field and country, job listings for equivalent employed roles, and the rates that agencies charge for the same work, which are usually public. Ask people doing similar work. Many will answer a direct question about ranges even if they will not discuss their own clients.

What you are looking for is a range and where you sit in it. Less experience puts you low in the range, not below it. A specialism that is hard to hire for, a portfolio in the client's exact sector, or a willingness to take the work nobody else wants all move you up.

Quote the project, not the hour

Clients buy an outcome. Hourly billing makes your efficiency a punishment: get faster and earn less. For well-defined work, quote a fixed price for a defined scope.

To do that safely you need three things in writing:

• What is included, in enough detail that both sides recognise the finished thing. Number of pages, number of revision rounds, what counts as delivered.
• What is not included, and what it costs if they want it. This is where most disputes are avoided.
• What happens when the scope changes. A short line saying additional work is quoted separately turns an argument into a decision.

Estimate the hours the work will take, apply your rate, then add a margin for the parts you cannot see yet. First estimates are usually optimistic, and the fixed price means the risk is now yours.

Practical habits around the number

• Do not quote on the spot. "I will send you a quote tomorrow" is a complete and professional answer. It also gives you time to work out the scope.
• Ask about budget early. Not to match it, but to find out whether you are in the same conversation before either side spends a week on it.
• Take a deposit on larger work. A payment before you start and one on delivery is a normal arrangement, and it filters out clients who were never going to pay.
• Put payment terms on the invoice, along with what happens when they are missed. Then follow up when they are missed, because the client who pays late once will do it again.
• Keep your own record of hours, even on fixed-price work. After three projects you will know whether your estimates are honest, and that is what lets you price the fourth one properly.

Raising the price later

Your first rate is a starting position, not a commitment. Raise it when you have evidence: work you can show, clients who came back, a queue you cannot serve. The usual method is to quote the new rate to new clients first, and to give existing clients notice in advance of their next project rather than mid-engagement.

Some of them will say no. That is the information you were after. A rate nobody ever declines is probably too low, and a rate everybody declines is a signal to look at your positioning rather than to panic. The point of building the number from your costs and your market is that you can adjust it deliberately instead of guessing again each time.