How to set hourly, project, and retainer pricing without underselling yourself — including a simple formula you can use today.
Most freelancers price by feel and underprice by a lot. A clearer model takes ten minutes to build and changes how much you earn for the rest of the year.
Start from a target take-home
Pick a yearly take-home number. Add 30% for tax, then add the cost of unpaid time: admin, sales, marketing, downtime, holidays. A realistic working freelancer bills around 1,000 to 1,200 hours per year, not 2,000.
Target hourly rate = (take-home × 1.3) ÷ billable hours
If you want to take home $80,000, that is roughly $104,000 gross. Divide by 1,000 hours and your floor rate is $104/hour. That is your floor — not your ceiling.
Quote projects, not hours
Once you have a floor, stop quoting hours to clients. Quote outcomes: "Landing page with copy and design, ready in two weeks, $4,800." Clients buy outcomes; hours invite negotiation.
Use a three-tier menu
For repeatable services, offer three packages: a small "starter" tier, a mid "standard" tier where most clients land, and a premium tier with extras. Roughly 60% of clients pick the middle option when given three; you can engineer that on purpose.
Retainers beat one-offs
A monthly retainer at 70% of the equivalent project rate is usually a better deal than chasing new clients every month. Predictable cash flow is worth the discount.
Raise your rate every year
Once a year, raise your rate for new clients by 10–20%. Existing clients can stay on their current rate until renewal. Almost no one quits over a 15% increase if your work is good.