How to Set Your Freelance Rates

Last Updated

May 13, 2026 1:58 AM

Est. Time to Complete

About 20–25 minutes to read; 30–45 minutes to complete the Rates Calculator.

Lesson Summary

How to calculate the minimum you need to charge to actually run a sustainable business — using real math, not vibes.

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Workbook

https://meltzerseltzer.com/shop/shop-all/rates-calculator

Before we get into this

Money stuff is hard. For a lot of us it's wrapped up in fear, shame, or stuff we learned growing up about what we deserve or don't deserve.

So before you open the spreadsheet, take a breath. The number you're going to calculate is just information. It doesn't say anything about your worth, your value as a person, or how likely you are to succeed. It's just math. Math that you need to know so you can build a business that actually supports your life.

Okay. Let's do it.

What your rates actually need to cover

A lot of new freelancers set their rates by looking at what other freelancers charge, or by what "feels" reasonable, or by what they think clients will say yes to.

Here's the problem with all of those approaches: none of them start with what you actually need.

Your rates need to cover:

Your personal living expenses (rent, groceries, bills, subscriptions, everything)
Your business expenses (software, tools, your website, any communities or courses)
Any debt you're carrying (minimum monthly payments)
Taxes (set aside at least 25–30% — more on this below)
Savings goals (emergency fund, retirement, time off)

That's your baseline. The number your business needs to hit every month for you to stay in it.

How to calculate your baseline hourly rate

The Rates Calculator does this math for you automatically — but here's how it works so the number makes sense when you see it.

Step 1: Add up your monthly expenses

Personal expenses + business expenses + debt minimums. Use real numbers from your bank statements, not estimates. If there's something you're not currently doing (like saving for retirement) but want to be doing, include it now. This is your chance to build the financial life you want.

Step 2: Find your baseline annual income

Multiply your monthly total by 12, then add taxes. I recommend adding 30% for taxes — it's a safe buffer for your first year, and the more you earn, the more accurate it tends to be. (If you pay less, great — that's money in your pocket.)

So if your monthly expenses are $3,000: $3,000 × 12 = $36,000 + 30% taxes = $46,800 baseline annual income

Step 3: Figure out your billable hours

This is where people mess up most often. Not all of your working hours are billable. Admin, emails, pitching, bookkeeping — that's all work, but you can't charge a client for it.

Start with how many hours you want to work per week. Then subtract:

2 hours/week if you're working 10 hours or fewer
4 hours/week if you're working more than 10 hours

That's your weekly billable hours. Multiply by 50 (not 52 — this gives you 2 weeks off per year).

Step 4: Divide

Baseline annual income ÷ annual billable hours = your baseline hourly rate.

Using the example above: $46,800 ÷ 800 hours = $58.50/hour

That's your floor. The minimum you need to charge to keep the lights on.

Three tiers to know

The Rates Calculator gives you three numbers, not one:

Baseline (settle): The minimum you need to cover your expenses and taxes. Charge this for your first few months while you're building experience and figuring out your services.
Goal: Where you want to be. A comfortable income that gives you some breathing room.
Reach: Your stretch number. What you'd charge if you had your pick of clients.

Knowing all three means you have a real range to work with — you're not guessing on sales calls, and you know exactly what it means to say yes to a lower-paying project.

A note on charging your baseline rate first

I recommend charging at or close to your baseline for your first three months. Not because you're worth less — you're not — but because you're also learning a lot right now. You're figuring out your niche, your services, your process, how to work with clients. Getting real work on your plate is how that learning happens.

After three months, revisit your rates. You'll almost certainly have reason to raise them.

Get the Rates Calculator

The calculator is a Google Sheets spreadsheet with tabs for personal expenses, business expenses, and debt — and it does all the rate math automatically once you've filled those in.

You can grab it below for $25. (It also lives inside the Freelance Resource Library if you ever decide to pick that up.)