Pricing your work as a freelancer — hourly, project, retainer
ost freelancers underprice their work for years before figuring out a sustainable rate. The mistake usually isn't laziness — it's using the wrong pricing model for the wrong type of work, then anchoring on a number that came from someone else's situation. The frameworks behind hourly, project, and retainer pricing aren't complicated, and once they're explicit, raising your rates becomes a calculation rather than a confrontation.
Freelance Pricing Models Overview
- Pricing your freelance work
- Hourly pricing basics
- Compute a real rate
- Naive hourly pitfalls
- Project pricing benefits
- Project pricing risks
- Retainers smooth income
- Retainer treadmill risk
- Raise rates by framework
Table of Contents
Quick reference
Real hourly rate
Take-home → +tax → +benefits → +overheads → /1,300 billable hours.
Billable hours
1,200–1,400 a year, not 2,000. The rest is admin and sales.
Project price
1.3–1.5× hourly equivalent. You're absorbing the scope risk.
Project scope
Yes/no deliverables, named out-of-scope, fixed revision count.
Retainer scope
Specific monthly hours or deliverables. Defined response time.
Monthly review
On every retainer. Catches scope drift before it becomes a treadmill.
Most freelancers underprice their work for years before figuring out a sustainable rate. The mistake usually isn't laziness — it's using the wrong pricing model for the wrong type of work, then anchoring on a number that came from someone else's situation. The frameworks behind hourly, project, and retainer pricing aren't complicated, and once they're explicit, raising your rates becomes a calculation rather than a confrontation.
What you'll learn
Hourly: how to compute a real rate
- 1
Set target take-home
Decide what you want to actually earn after taxes, in your home country.
- 2
Add taxes and benefits
Add roughly 30–40% for tax plus 20–30% for benefits on top of your take-home target.
- 3
Include overhead costs
Add 5–10% for software, hardware, accounting, and professional development overheads.
- 4
Divide by billable hours
Divide the total annual amount by realistic billable hours, around 1,200–1,400 a year, not 2,000.
The naive hourly rate calculation is the source of most freelance underpricing: take a target salary, divide by 2,000 hours a year, charge that. It misses several costs that an employer used to pay for you.
A realistic computation:
- 1Target take-home income. What you want to actually earn after taxes, in your home country.
- 2Add taxes back. For US freelancers, roughly 30–40% on top of take-home (federal + state + self-employment tax). UK and EU vary; check your jurisdiction.
- 3Add benefits. Health insurance, retirement contributions, paid time off — easily 20–30% of salary in markets where employers normally cover these.
- 4Add overheads. Software, hardware, accounting, professional development. 5–10%.
- 5Divide by billable hours, not total hours. Realistic billable hours for a freelancer are 1,200–1,400 a year, not 2,000. The rest is admin, sales, marketing, sick days, holiday, training.
Worked example: target take-home of $80,000 → add 35% for tax → $108,000 → add 25% for benefits → $135,000 → add 8% for overheads → $146,000 → divide by 1,300 billable hours → ~$112/hour.
That number will surprise people who were charging $50/hour and wondering why they couldn't afford a vacation. The number isn't aspirational; it's the floor.
When project pricing beats hourly
Hourly pricing is the safe default; project pricing is where higher-value freelancers earn more and where the worst overruns happen.
Use project pricing when:
- The scope is genuinely defined. "Build the homepage and three product pages" can be project-priced. "Improve the marketing site" cannot.
- You've done similar work before. Project prices on novel work are gambles; on familiar work, they reward your speed.
- The client cares about the outcome more than the hours. Some clients want to know the cost up front; others are buying your time. Read the situation.
The scoping that protects you:
- 1Write the scope as a list of deliverables, with each deliverable phrased as a yes/no observable outcome.
- 2Define what's out of scope explicitly. Anything the client might reasonably expect that you're not including.
- 3Specify the revision count. Two rounds of feedback is typical. Beyond that is hourly billable, and the contract says so.
- 4Anchor your project price at 1.3–1.5× the hourly equivalent to compensate for the risk you're taking on the scope.
- 5Stop the project if scope changes substantively. Rewrite the scope, agree a new price, restart. The temptation to absorb scope creep silently is the single biggest reason project pricing fails.
Done well, project pricing pays better than hourly because clients value certainty and you get paid for your speed. Done badly, project pricing turns into hourly work paid at a project rate.
Retainers: predictable income, with a trap
- 1
Define a specific monthly scope
Set clear limits like “up to X hours, or up to N specific deliverables,” not “available as needed.”
- 2
Set response time expectations
Promise replies within one business day and project work scheduled within one week, not “always available.”
- 3
Hold a monthly review
Discuss what worked, what didn’t, and whether to continue; monthly is right, quarterly too long, weekly too much.
- 4
Include an exit clause
Let either side end the retainer with 30 days' notice so there are no lock-ins.
- 5
Use reviews to renegotiate
If hours exceed the agreed scope two months running, renegotiate the retainer before scope quietly drifts upward.
Retainers are monthly fixed fees for ongoing access to your services. Done well, they smooth your income and build long-term client relationships. Done badly, they become a treadmill of unbounded work for declining hourly rates.
The structure that works:
- A specific scope per month. "Up to X hours, or up to N specific deliverables." Not "available as needed."
- A defined response time. "Replies within one business day; project work scheduled within one week." Not "always available."
- A monthly review. What worked, what didn't, whether to continue. Quarterly is too long; weekly is too much.
- An exit clause. Either side can end the retainer with 30 days' notice. No lock-ins.
The trap most retainers fall into: scope drifts upward without the price changing. The client realises they can ask for more, and they do, and you say yes a few times because the relationship is good, and then "the retainer" means something very different than it did six months ago.
The fix is the monthly review. If hours have crept up beyond the agreed scope two months running, you renegotiate. The client almost always agrees — because they like working with you and because the original number was fair, not because they're trying to take advantage. The renegotiation conversation is awkward only the first time.
Want a more guided way to practise this?
Common questions
How do I raise my rates with existing clients?
Annually, with 60–90 days' notice. "Starting [date], my rate moves to X. I'd love to keep working together — let me know if that works." Most clients accept; the ones who push back are usually the ones who would have left anyway. Avoid mid-engagement raises unless scope materially changes.
Should I publish my rates?
Mixed. Publishing rates filters out cheap clients before they call, but caps your upside on the high end. A reasonable middle ground: publish a "starting at" range that's your floor, and quote real prices on intake.
What about value-based pricing?
Useful when you can plausibly tie your work to a measurable business outcome (revenue, cost savings, conversion). Less useful when the outcome is fuzzy or long-delayed. Most freelancers benefit from project pricing first; value-based is an advanced move that pays off in specific niches.
How do I know if I'm underpricing?
Two strong signals: every prospect says yes immediately (your rate is too low), and you can't take on work without sacrificing rest or quality (you're subsidising the rate with your life). One signal is fine; both means raise.
Bottom line
Compute your real hourly rate against actual billable hours and full costs, not the naive salary divisor. Project-price familiar work with tight scope and a 30%+ premium. Use retainers for ongoing relationships, with explicit scope, response times, and a monthly review. Raise rates annually. The maths is simpler than the politics.