The Freelancer Pricing Formula
Many new freelancers simply take an employee hourly wage and charge clients that exact number. This leads to under-earning because freelancers must cover expenses that employers typically pay.
5 Essential Factors to Include
- Self-Employment Tax: Freelancers pay both employee and employer portions of Medicare and Social Security taxes (~15.3%).
- Unbillable Hours: Only 60% to 70% of a freelancer's working hours are client-billable. The rest goes to client outreach, invoicing, and admin.
- Health Insurance & Benefits: Out-of-pocket health insurance premiums, disability coverage, and retirement savings.
- Business Overhead: Software subscriptions, hardware, office space, accounting fees, and legal costs.
- Paid Time Off (PTO): Unpaid vacation days, sick leave, and public holidays.
Calculate Your Target Freelance Rate
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