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There is no market rate for you, which is why every calculator that asks for your hourly rate is circular. What exists instead are three floors: the survival floor, meaning what you must earn to cover your life and your business costs; the replacement floor, meaning what an employed version of you would cost once holiday, pension and employer tax are added back; and the market floor, meaning what comparable people charge. Your rate is above the highest of the three, never the average. The four steps below produce that number from figures you already have, and the calculator further down does the arithmetic.
Search this and you get two kinds of answer. Generic lists of five pricing strategies, which do not produce a number. And calculators that ask for your hourly rate in order to tell you your hourly rate, which is the question you arrived with.
The reason both fail is that pricing advice is written for products. A product has a unit cost, so you build up from it. When you sell your own time and skill there is no unit cost, and the floor has to be constructed from something else. That is what this does.
How Much Should I Charge? Work It Out in Four Steps
Every figure below is already in your bank account or your head. None of it requires research.
- Decide what you need to earn, not what you hope to. Take your annual personal costs, the amount you actually have to pay out to live. Add your business costs: software, insurance, accountant, equipment. Add the tax you will owe on top, because the money you bill is not the money you keep. That total is what the business has to produce in a year.
- Work out the days you can actually sell. Not 365, and not 260. Subtract holiday, illness and the weeks that are quiet because you were delivering rather than selling. Then apply the honest billable percentage: for most people running alone it lands somewhere near half to two thirds, because admin, sales, invoicing and the work of finding the next client are not billable and do not disappear.
- Divide, and treat the answer as a floor rather than a price. Total needed divided by sellable days gives your survival floor. It is the number below which you are subsidising your clients out of your own savings. It is not your rate. It is the line under your rate.
- Raise it to the highest of the three floors. Compare the survival floor against the replacement floor and the market floor, both explained below. Charge above whichever is highest. Averaging them is how people end up with a number that is defensible to nobody and comfortable for nobody.
That produces a rate. What it does not produce is confidence, which arrives later and separately, usually after the first client accepts it without arguing.
Aziz's take: The billable percentage in step two is where almost everyone lies to themselves, and it is the single biggest reason people end up underpaid. You do not get 5 sellable days a week. You get 2 or 3, because the rest goes on the work that makes the selling possible. I would rather see someone set a rate assuming 3 billable days and be pleasantly surprised than set one assuming 5 and quietly work weekends to make the maths true. If the number that comes out feels too high, the number was always too high. You just were not seeing it before.
The Rate Calculator
Fill in the highlighted values top to bottom. Sections 01 and 02 produce section 03, and section 03 produces the decision in 04. Write UNKNOWN rather than guessing, because a guess in section 01 becomes a rate you resent in section 04.
How to use this
Fill in
- Section 01 with what you must cover, not what you would like to earn. Aspiration belongs in section 04.
- Section 02 honestly. The billable percentage is the number people inflate, and it is the one that decides everything.
- Section 03 last. It is arithmetic on the two above plus one number you look up.
Check before you use it
- Tax is included in 01. Billed money is not kept money.
- The billable percentage in 02 reflects a real recent month, not a good one.
- Your rate in 04 is above the HIGHEST floor in 03, not the average of them.
What goes wrong
- Using 5 billable days a week. Nobody running alone sells 5 days and still finds the next client.
- Forgetting tax and the quiet weeks, then wondering why a busy year left nothing behind.
- Setting the rate once and never revisiting it while costs rise underneath.
The Three Floors, With the Arithmetic
A worked example, using round numbers so the method is visible rather than the figures.
The survival floor. Someone needs 45,000 a year to live, has 9,000 of business costs, and sets aside 15,000 for tax. That is 69,000 the business has to produce. They work 47 weeks after holiday, 5 days a week, which is 235 working days. But only 60 percent of that is client work once admin, sales and invoicing are removed, giving 141 sellable days. 69,000 divided by 141 is 489 a day. Round it to 490. Across a 7 hour billable day that is 70 an hour.
Notice what happened. A person who thinks of themselves as needing 45,000 has a floor of 490 a day. The gap between those two numbers is where underpricing lives, and it is entirely made of tax, costs and unbillable time.
The replacement floor. Take what an employed version of you earns. Add back what an employer pays on top: holiday, sick pay, pension, employer tax, equipment, training. Then divide by your sellable days rather than their working days, because they are paid for 235 days and you are paid for 141. The result is usually well above the salary figure people anchor to, which is why leaving a job and charging your old daily salary is a pay cut wearing a promotion.
The market floor. What comparable people charge, found by asking peers, reading public rate cards, and noticing what clients flinch at. This is the only one page 1 of Google talks about, and it is the least reliable of the three, because it tells you what other people decided under their own constraints. Use it as a sanity check on the other two, never as the answer.
Your rate sits above the highest floor. If the market floor is below your survival floor, the honest conclusion is not to charge less. It is that this market cannot support you at your current cost base, and something has to change: the costs, the clients, or the offer. The unit economics make that visible before it becomes a crisis.
How Much Should I Charge Per Hour, Per Day or Per Project
The same floor can be expressed three ways, and the choice changes what you are rewarded for.
Hourly is easiest to justify and worst to be paid by, because it puts you and the client on opposite sides: every efficiency you find reduces your income. It suits genuinely open-ended work where nobody can scope the end.
A day rate removes the minute counting and is the most common for a business of one. It works when the unit of work is a day of attention. Set a minimum engagement alongside it, because a half day that costs you the surrounding hours is a full day.
A project price is the only one that pays you for being good rather than for being slow, because the price holds whether it takes you four days or two. It requires a scope written down, which is where most of the risk sits. Tie the payments to defined stages rather than to the end, and payment milestones covers how that schedule is structured.
Whichever you use, the floor underneath is the same. The shape is a packaging decision, not a pricing one.
What Goes Wrong
Assuming five billable days. The most common and most expensive error. A rate built on 235 sellable days collapses when the real figure is 141, and the collapse shows up as working weekends to make an already-set rate survivable.
Forgetting that billed money is not kept money. Tax and business costs come out before anything reaches you. A rate set against your desired take-home, without them, is short by a large margin in a direction you only discover in January.
Quoting the number you think they will accept. This is guessing at their budget instead of stating your floor, and the guess is nearly always low. Say the real number and let them decide. A client who says no to your rate was not going to be a good client at a lower one.
Discounting rather than reducing scope. Cutting the price for the same work teaches the client that your first number was theatre. Cutting the scope for a lower price keeps the rate intact and makes the trade explicit.
Never revisiting it. Costs rise, skill rises, the rate stays. Put a review date in the calendar, because no client will ever suggest one. Raising rates on existing clients is its own conversation, and it is easier when it is annual and expected rather than sudden. Financial controls covers the review habit more broadly.
One last thing worth saying plainly. Talking to the people you want to serve is the fastest way to find out what the work is worth to them, and customer interviews are how that conversation is run without turning it into a sales pitch.