Set Your Rates With Confidence

It depends on the work. Hourly pricing makes sense for ongoing, undefined, or evolving scope — consulting calls, maintenance, or work that's genuinely hard to scope upfront. Project pricing is better for defined deliverables (a website, a brand identity, a copy deck) — it rewards your efficiency, removes the 'why did this take so long?' dynamic, and lets you charge based on value rather than time. Most established freelancers primarily use project pricing and reserve hourly for advisory work or retainer arrangements. If you're new to freelancing, project pricing will train you to scope work accurately, which is a skill worth building early.

The clearest signal is a consistent 100% close rate — if every prospect says yes, you're probably undercharging. A healthy close rate for a well-positioned freelancer is 30–50%. If you're closing 60–70%+ of qualified inquiries, your rate is low relative to your value. Other signs you're undercharging: you're always fully booked with no breathing room, you feel resentful about what you're earning, or clients rarely push back on scope. A rate is 'too high' only when you're consistently losing prospects you genuinely wanted — and even then, the fix is often better positioning, not a lower rate.

A day rate is a flat fee for a full working day (typically 7–8 hours). It's used most often for on-site or intensive work — production days, workshops, consulting days, or any engagement where the client is buying your full availability for a day rather than tracking hours. A day rate simplifies billing and removes the granular hour-tracking dynamic. Most freelancers set their day rate at 7–7.5× their hourly rate. Example: $120/hr × 7.5 = $900/day. Some creative and consulting freelancers quote exclusively in day rates, especially for clients accustomed to agency pricing, where day rates are the standard unit.

At minimum, once per year. Many experienced freelancers raise rates every 6 months in their growth phase. The strongest signals that it's time to raise: you're turning down work because you're fully booked, it's been 12+ months since your last increase, you've added meaningful skills or a new specialization, or your results for clients have measurably improved. The typical increase is 10–25% per raise. Give existing clients 30–60 days' notice. Don't apologize for raising your rates — simply announce the new rate and the effective date. Most good clients will stay, and the ones who don't weren't your best clients anyway.

In the US, freelancers pay self-employment tax (15.3% on the first ~$160k of net income in 2024) on top of regular income tax. This means your effective tax rate as a freelancer is typically 25–35% of gross income — significantly higher than an employee's take-home, because employers normally cover half of payroll taxes for employees. This is why your freelance rate needs to be higher than your equivalent employee salary just to break even. Rule of thumb: multiply your target hourly salary equivalent by 1.35–1.40 to account for taxes and no benefits. Always set aside 25–30% of every payment for taxes, and work with a CPA who understands freelance income to optimize your deductions.

A retainer is a recurring monthly agreement where a client pays you a fixed fee for a set amount of work or availability each month. It's the most stable income structure in freelancing — predictable revenue, ongoing client relationships, and no constant re-selling. There are two types: hours-based (client buys X hours/month) and deliverables-based (client gets X outputs per month — often better because it protects your time). Most freelancers should work toward having at least one or two retainer clients as a base layer of income. A good time to propose a retainer: after you've completed a successful project with a client and they clearly need ongoing support. Never propose a retainer cold — earn it first.