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How to Calculate Your Freelance Hourly Rate: Formula, Project Quotes and Packages

Last updated: 9 October 2026

By Bolde team

Digital tools & templates · Based in Finland

Most freelancers set their first rate by looking at what other people charge and picking a number that feels safe. The problem is that a safe-feeling number tells you nothing about whether it pays your bills, your taxes and your holidays. This guide walks through a simple formula you can work out in about fifteen minutes, then shows how to turn that hourly rate into project quotes and packages without losing money on the way.

Everything below uses one fictional freelancer and round, made-up numbers. Swap in your own as you read.

The freelance hourly rate formula

The core idea is to work backwards from the money you need, not forwards from what the market seems to pay. In words:

Hourly rate = (target take-home pay ÷ (1 − tax share) + yearly business costs) ÷ billable hours per year

Four inputs, each with one honest question behind it:

• Target take-home pay. What do you want to have left for yourself in a year, after tax? Start from your real living costs plus savings, not from a salary you once had.
• Tax share. Roughly what share of your profit goes to income tax and social contributions? This depends on your country, your business form and your income, so treat it as an estimate and check it with your tax office or an accountant.
• Yearly business costs. Software, equipment, insurance, accounting, phone, courses, a share of your workspace. Add them up per month and multiply by twelve.
• Billable hours per year. The hours a client actually pays for. This is the input most people get wrong, so it gets its own section.

Why divide by (1 − tax share) instead of adding a percentage on top? Because tax is taken from your profit. If 30% of every euro of profit goes to tax, you need about €1.43 of profit to keep €1. Dividing by 0.7 gives you that number; multiplying by 1.3 would leave you short.

Billable hours: the number that changes everything

A full-time employee works roughly 52 weeks × 40 hours. A freelancer never bills that. You take holidays, you get sick, and a large part of every week goes to work nobody pays you for: replying to enquiries, writing proposals, invoicing, bookkeeping, marketing and learning.

Work it out in three steps:

1. Working weeks. Start from 52 and remove holidays, public holidays and a few sick days. Many people land somewhere around 44–47 weeks.
2. Working hours. Multiply by the hours you realistically work in a week.
3. Billable share. Multiply by the share of those hours a client pays for. If you are new and still finding clients, this is often well below 60%. Track one normal month of your time if you are unsure; the real number is usually lower than your guess.

Worked example: Aino, a fictional brand designer

Aino is a made-up freelance designer. Her numbers are invented for this example and are not advice about what you should earn or pay.

Now the maths, one line at a time:

1. Profit needed before tax: €36,000 ÷ 0.7 = €51,429
2. Add business costs: €51,429 + €4,800 = €56,229 revenue needed per year
3. Divide by billable hours: €56,229 ÷ 1,012 = €55.56 per hour

That €55.56 is Aino’s floor: the rate at which everything only just works if every planned hour gets sold. Real years have quiet months, late payments and a client who disappears halfway. So she adds a 10% buffer: €56,229 × 1.1 ÷ 1,012 = €61.12, which she rounds up to €62 per hour.

Her day rate follows from the same number. If a client books her for a full day and she can bill 7.5 hours of it, her day rate is 7.5 × €62 = €465.

If Aino is registered for VAT, all of these prices are before VAT, and VAT is added on the invoice. In Finland, for example, the general VAT rate is 25.5% (vero.fi), so a €1,000 job is invoiced as €1,255 to the client.

From hourly rate to a project quote

Many clients prefer a fixed price, and that is often better for you too: you get paid for being fast and experienced instead of being punished for it. The hourly rate is still the engine underneath. Here is a simple five-step quote:

1. List the tasks. Break the project into pieces small enough to estimate: brief, research, first drafts, revisions, final files, handover.
2. Estimate hours per task. Use your own past projects if you have them. If you track time, this step gets easier every month.
3. Add contingency. Projects almost always take longer than the estimate. 10–20% is a common cushion; use the high end with new clients or vague briefs.
4. Multiply by your rate and round. Round to a clean number. Rounding up is fine; rounding down is a discount, so do it on purpose or not at all.
5. Write down what is included. Number of revision rounds, file formats, the deadline, and what happens if the scope grows. This protects the price more than any number does.

Aino’s fictional logo project:

She quotes €1,600 + VAT, asks for 50% up front, and lists two revision rounds as included. If the project goes smoothly in 22 hours, her effective rate is about €73 per hour. If it runs over, the contingency absorbs it.

Turning the rate into packages

Packages make buying easier. Instead of a custom quote for every enquiry, you offer three clear options, and most clients pick one quickly. The trick is to build each package from hours, then check its effective hourly rate so a “deal” never drops below your floor.

A few rules that keep packages healthy:

• Every package should clear your floor rate. Aino’s floor is €55.56. All three packages sit above it, so none of them loses money.
• Make the middle one the obvious choice. The middle package should solve the most common problem completely. The smallest exists for tight budgets, the biggest for clients who want everything handled.
• Limit revisions and say so. “Two revision rounds” is a price, not a detail.
• Consider a monthly retainer. For ongoing work, sell a fixed block of hours each month. Aino could offer 10 hours a month at a small 5% discount: 10 × €62 × 0.95 = €589, rounded to €590 per month. The discount buys her predictable income, which is worth something.

Common pricing mistakes

• Using 2,080 hours. That is an employee’s year. Using it can cut your calculated rate roughly in half.
• Forgetting tax or treating it as optional. The money for tax has to come from your prices. Set aside a share of every paid invoice so the tax bill is never a surprise.
• Pricing only against competitors. Their costs, hours and goals are not yours. Look at the market after you know your floor, not before.
• Never revisiting the number. Re-run the formula once a year, and whenever your costs or your demand change noticeably. If you are fully booked for months, that is information about your price.

What to do next

Once you know your rate, the next two jobs are making sure you actually get paid and keeping an eye on where the money goes. The guide on how to track invoices as a freelancer covers due dates, overdue flags and reminder emails, and the small business monthly budget guide shows a simple budget vs actual review. When enquiries start coming in, a simple CRM spreadsheet keeps every quote and follow-up in one place.

If you would rather not build the sheet yourself, the Bolde Freelance Rate Calculator does all of the above in Excel, Google Sheets or LibreOffice: rate from your goal, project quotes with contingency and VAT, three packages and a retainer, each with its effective hourly rate shown. It is a planning tool, not tax advice.

Questions

How do I calculate my freelance hourly rate?

Divide your target take-home pay by (1 − your estimated tax share), add your yearly business costs, and divide the result by the hours you can realistically bill in a year. Add a small buffer for quiet months and round up.

How many billable hours does a freelancer have in a year?

It depends on your holidays, your working week and how much time goes to admin and finding clients. Work it out as working weeks × weekly hours × billable share, and track a normal month to check your billable share instead of guessing.

Should I charge hourly or per project?

Both can work. Your hourly rate is the foundation either way: estimate the hours, add contingency, multiply by your rate and round. Fixed project prices and packages are often easier for clients to say yes to, as long as the scope and revision rounds are written down.

Bolde · hello@bolde.fi