The Fatal Flaw in Hourly Pricing
Most beginners look at a standard W-2 salary, divide it by 2000 hours, and arrive at a catastrophic conclusion. If you want to make $100k, $50 an hour will bankrupt your freelance business. Why? Because it assumes 100% utilization, zero taxes, and zero overhead.
Calculating the "True" Hourly Rate
A sustainable freelance rate must account for:
- Self-Employment Tax: You are responsible for both the employer and employee side of payroll taxes.
- Unbillable Time: Accounting for marketing, sales calls, invoices, and email. You will realistically only bill 20-25 hours a week.
- Overhead: Software, equipment, health insurance, and retirement.
Moving Toward Value-Based Pricing
Working hourly eventually caps your earning potential. Once you have used our Freelance Rate Calculator to establish your absolute minimum baseline floor, you should attempt to quote projects on a flat, value-basis.