If you've ever tried to quote a client as a freelancer, you know the feeling. You stare at the email, type a number, delete it, type a lower one, then spend the next two hours wondering if you sold yourself cheap. Most people either pick a figure out of thin air or copy what a friend charges. There is a better way: start from the salary you want to earn, and work backwards to a proper freelance hourly rate. The maths is simpler than it looks, and once you've done it properly you'll never guess at a rate again.
Why your old salary isn't your freelance rate
The biggest mistake new freelancers make is taking their old job's hourly pay and using it directly. If you earned the equivalent of £20 an hour in a salaried role, charging £20 an hour as a freelancer leaves you quietly losing money.
That's because your employer used to pay for things you now have to cover yourself:
- Paid holidays and sick days
- Pension contributions
- Income tax admin and, in some roles, software and equipment
- The hours you spent looking for work, sending invoices and chasing late payers
Your salary also arrived whether or not you had clients. Freelance income doesn't. A sound rate calculation accounts for all of that before it lands on a number, which is why a fair freelance rate usually ends up being two to three times your old salaried hourly equivalent. That isn't greed. That's just breaking even on the things employment gave you for free.
Step 1: Pick your target salary
Start with the salary you want to earn over a year, before tax. Be honest here, not aspirational. Use what your skills would realistically earn in employment, or the amount you genuinely need to live on plus a margin.
Worked example: Let's say you'd like to earn £45,000 a year. That's your starting point.
If your old job came with an employer pension contribution, add that to the target, because nobody pays it for you now. The steps below take care of holidays, sick days and unpaid admin.
Step 2: Work out your actual billable hours
This is where most self-employed rate calculations fall apart. There are around 260 working days in a year, but you will not bill all of them.
Take off time realistically:
| Item | Days |
|---|---|
| Weekdays in a year | 260 |
| Holidays | -25 |
| Sick days & life admin | -8 |
| Non-billable admin, marketing, pitching | -45 |
| Billable days left | 182 |
That leaves 182 days. At 7 productive client hours a day (nobody truly bills a full 8), that's roughly 1,274 billable hours a year.
This is the number people get wrong. If you divide your target by 2,080 hours (a full salaried year), you'll undercharge by a mile.
Step 3: Do the hourly rate calculation
Now the simple part:
£45,000 ÷ 1,274 hours = £35.32 per hour
Then add your business costs. Laptops, software, insurance, accounting and a tax buffer might reasonably add up to £3,000 a year. Spread over your billable hours, that's about £2.35 more per hour. Round it up and you're looking at roughly £38 an hour to match a £45,000 salary properly, not the £21.63 you'd get from a naive salary to hourly rate conversion.
Rather than redoing this on a spreadsheet every time a client asks for a quote, keep the three numbers from the steps above (target salary, billable hours, yearly costs) in a note on your phone. When a client asks, the maths is one division and one addition. Thirty seconds with a phone calculator and you have a rate you can defend.
Step 4: Add a profit margin and sanity-check it
Breaking even is not the goal. Add 10% to 20% on top for profit, slow months and the clients who pay 45 days late.
Using the example above: £38 + 15% lands you around £44 an hour. You'd quote £45 an hour, or £315 for a seven-hour day.
Before you settle, sanity-check your figure three ways:
- The market check: Do people with your experience in your field charge in that ballpark? If everyone charges £60 and you're at £45, you're leaving money on the table.
- The fear check: If the number makes you slightly nervous to say out loud, it's probably about right. Most people undercharge because they price for comfort, not survival.
- The project check: Would you still be happy if the job took 20% longer than planned? If not, quote a project fee with room built in instead of a pure hourly rate.
Day rate or hourly rate? A quick word
Many freelance clients, especially agencies, prefer a day rate. Converting is easy: multiply your hourly rate by the number of hours you genuinely bill in a day, usually 7 or 8.
£45 an hour × 7 hours = £315 a day
Don't make the classic error of quoting a day rate that's just your hourly rate times eight but then working ten-hour days. The day rate buys the day you defined, nothing more.
What to do when a client says you're too expensive
It will happen. Don't drop your rate on the spot. Instead, reduce the scope: fewer deliverables, a longer deadline, or a simpler version of the job. Cutting scope protects your rate and often still solves the client's problem. If you must offer a discount, trade it for something valuable: payment upfront, a longer contract, or a testimonial you can actually use.
And remember, the right rate isn't the one every client accepts. If nobody ever says no, you're almost certainly too cheap.
Frequently asked questions
How do I convert my salary to an hourly rate? Divide your annual salary by your real billable hours, not the 2,080 hours of a salaried year. Freelancers typically bill 1,100 to 1,400 hours a year once holidays, admin and business development are removed, so your freelance hourly rate will look much higher than your old salaried equivalent, and that's correct.
What is a good freelance hourly rate in the UK? It depends entirely on your field and experience, but as a rough guide, many skilled freelancers charge somewhere between £30 and £75 an hour. The right figure for you comes from your own salary target and billable hours, not from averages.
Should I charge an hourly rate or a day rate? Hourly suits short, well-defined tasks. Day rates suit agency work and longer projects where output matters more than clock-watching. Calculate one, convert to the other with your true billable hours, and never let a "day" quietly stretch into ten hours.
How often should I raise my freelance rate? At least once a year, in line with inflation and your growing experience. Existing clients expect modest annual rises; give them notice, keep it short, and don't apologise for it.
The bottom line
Setting a freelance rate isn't guesswork. Take your target salary, divide it by the hours you'll genuinely bill, add your costs and a margin, and you have a rate you can defend without flinching. Once you've done it once, quoting becomes the easiest part of the job. If you want to test different salary targets or hour patterns quickly, just rerun the same three steps with the new numbers: tweak the target, adjust the hours, see what your rate should be, and send that quote with confidence.