How to calculate your freelance rate
The formula is: (Target net income ÷ (1 − tax rate) + business costs) × (1 + margin) ÷ billable hours per year. Most freelancers underestimate costs and billable hours, leading to rates that leave them underpaid.
Why is my rate higher than I expected?
As a freelancer you cover costs that employers normally pay: pension contributions, employer's NI/social security, sick pay, holiday pay, tools, insurance and self-employment taxes. A rate of 1.5–2× your equivalent employee salary is typical to achieve the same net income.
What is a "billable hour"?
A billable hour is time spent on actual client work you can invoice for. In an 8-hour day you might only bill 5–6 hours after admin, emails, sales calls, learning, and breaks. The rest is overhead time you need to factor into your rate.
Should I charge a daily or hourly rate?
Daily rates (day rates) are common in the UK and Europe for contractors. Hourly rates are more common for project work and in the US. Daily rates reduce the admin of tracking exact hours and are often preferred by both clients and freelancers for longer engagements.
How much should a freelance developer charge?
In the UK, freelance developer rates range from £300–£800/day (£37–£100/hr) depending on seniority and stack. In mainland Europe €300–€600/day is typical. Rates vary widely by specialism — DevOps, data engineering and security tend to command premiums.