Most people starting out price by guessing. They look at what one competitor charges, knock a bit off to feel safe, and end up busy but short of money.
Good pricing has two parts. First, a minimum rate based on your own numbers, so you know what you can't go below. Second, a price based on the market and the value of the work, which is usually higher. This guide covers both, with a worked example.
Why you need a minimum rate first
A minimum rate tells you the lowest price that still pays your bills. Without one, it's easy to say yes to work that looks fine on the day but doesn't add up across a year.
Three things push a freelance rate well above the hourly equivalent of a salary. You pay your own tax and National Insurance. You pay your own business costs, from software to insurance. And you don't get paid for holidays, sick days or the time you spend finding work, sending invoices and doing admin. Employees are entitled to at least 5.6 weeks of paid holiday a year. When you work for yourself, those weeks have to be paid for out of your rate.
Work out your minimum day rate: a worked example
Say you're a sole trader in England and want to take home about £30,000 a year after tax. In 2026 to 2027, a profit of £36,000 gets you there. Income Tax is 20% of £23,430 (the £36,000 minus the £12,570 Personal Allowance), which is £4,686. Class 4 National Insurance is 6% of the same £23,430, which is £1,405.80. That leaves £29,908.20.
Next, add your business costs. Say software, equipment, insurance, a phone and an accountant come to £3,600 a year. You need £39,600 coming in.
Now count your billable days. There are about 260 weekdays in a year. Take off 8 bank holidays, 25 days of holiday and 7 days for illness and training, and you have 220 working days. Not all of those can be charged to clients, because you'll spend time on marketing, sales calls, admin and quiet spells. If 60% is billable, that's 132 days. £39,600 divided by 132 is £300 a day. If a billable day is about six hours of client work, that's £50 an hour.
That £300 is your floor. Charge less and you're falling short of your target, before any pension saving. Our day rate calculator runs these numbers for you with your own figures.
Day rate, hourly, project or packages?
The best model depends on the type of work and how predictable it is. Many freelancers use more than one, for example a day rate for ongoing work and a fixed price for well defined projects.
- Hourly: simple and fair for small, unpredictable tasks, but it caps your income at your hours and can make clients watch the clock.
- Day rate: common for consultants, developers and contractors. Easier to sell than hourly and less admin to track.
- Project price: one fixed fee for a defined result. Clients like the certainty, and you gain if you work efficiently, but you need a clear scope and a plan for extra requests.
- Packages: set bundles at set prices, such as a starter, standard and premium option. They make buying easy and stop every enquiry turning into a custom quote.
- Retainers: a monthly fee for an agreed amount of work or availability. Good for steady income, as long as the scope is written down.
Research what the market pays
Your minimum rate tells you what you need. The market tells you what clients will pay. Look at the published prices of people offering similar services to similar clients in your area or niche. Check contract job listings, which often show day rates. Ask other freelancers in your field what they charge, as most are happy to share ranges.
The most useful research is talking to potential clients. Ask what they've paid before, what budget they have in mind and what went wrong with previous suppliers. If the market rate is well below your minimum, that's important information. It may mean changing the service, the type of client you target or the business model, rather than working for less than you need. Our guide to market research on a budget has more ways to find out.
Value-based pricing
Value-based pricing sets the price by what the result is worth to the client, not how long it takes you. A website that brings a business more enquiries, or a process change that saves a team several hours a week, may be worth far more to the client than the days you spent on it.
To price this way, ask questions before you quote. What problem are they solving? What is it costing them now? What would success look like in six months? If a project is likely to be worth a lot to the client, a fixed price that reflects part of that value is fair to both of you. It works best with business clients and clear outcomes, and it's easier once you have results you can point to.
How to raise your prices
If you're fully booked, or nobody ever questions your quotes, your prices are probably too low. The easiest place to start is with new clients. Quote your new rate to every new enquiry and see what happens.
For existing clients, give plenty of notice, often a month or two, and keep the message short and confident. Say what the new rate is, when it starts and thank them for their work so far. You don't need to over-explain. Reviewing your prices once a year, at the same time each year, makes increases feel normal rather than personal.
What to say when someone says you're too expensive
Don't drop your price straight away. First find out what they mean. It might be over their budget, or they might not see the difference between you and a cheaper option. Ask what budget they had in mind and what matters most to them.
If the budget is genuinely lower, reduce the scope rather than the rate. Offer a smaller package, a first phase or fewer revisions. You could also offer to split the payment into stages. If it still doesn't work, it's fine to let it go. Some clients aren't the right fit, and working below your floor makes it harder to serve the ones who are.
These conversations get easier with practice. If you find them awkward, Exitnine's pitch practice lets you rehearse them out loud before the real thing. You'll find more on winning work in how to get your first customers.
Questions people ask
How do I work out my freelance day rate?
Add the income you need before tax to your yearly business costs, then divide by the number of days you can realistically bill. That gives your minimum day rate, which you then compare with what the market pays.
Should I charge hourly or by project?
Hourly suits small, unpredictable tasks. Project pricing suits work with a clear scope and rewards you for working efficiently, as long as you agree what's included.
How many days a year can a freelancer bill?
It varies by person and type of work. After holidays, sickness, admin and time spent finding work, it's always well below the 260 weekdays in a year. If you don't have your own figures yet, planning on around 60% of your working days is a cautious starting point.
Do I need to add VAT to my prices?
Only if you're VAT registered. You must register once your taxable turnover goes over £90,000 in a rolling 12 months, and you can choose to register earlier.