How to Calculate Your Hourly Rate as a Freelancer in the UK

Whether you’re just starting out or looking to adjust your current pricing, understanding how to calculate your hourly rate as a freelancer is a critical step in building a sustainable and successful freelance business. Setting the right rate ensures you earn enough to cover your costs, reflect your skills and experience, and plan for the future.

In this guide, we’ll walk through the key factors to consider, how to calculate your rate step by step, and tips for communicating your value to clients.

Why Your Hourly Rate Matters

Your freelance rate isn’t just a number, it’s a reflection of:

• Your expertise and value
• The cost of running your business
• Your financial goals and lifestyle needs
• Industry expectations and market demand

Setting your rate too low can leave you overworked and underpaid. Set it too high without justification, and you risk pricing yourself out of the market. The goal is to find a balance that works for you and the clients you want to serve.

Step 1: Work Out Your Personal Income Target

Start with your annual income goal the amount of money you want or need to take home after covering business costs and taxes.

Let’s say you want to take home £35,000 per year.

That’s your target personal income, but it’s only part of the picture. You’ll also need to account for taxes, expenses, and non-billable time.

Step 2: Add Your Business Expenses

Freelancers often overlook how much it costs to run their business. Make a list of all recurring costs, including:

• Software and subscriptions
• Marketing and website hosting
• Equipment and office supplies
• Insurance and professional memberships
• Accounting or bookkeeping fees
• Workspace costs (home office or coworking)

Let’s assume your annual business expenses total £5,000.

Now your total income target is:
£35,000 (personal income) + £5,000 (expenses) = £40,000

Step 3: Estimate Your Tax and National Insurance

As a freelancer in the UK, you’ll pay:

• Income Tax on profits above the personal allowance (£12,570 for 2025/26)
• Class 2 National Insurance Contributions (around £3.45 per week)
• Class 4 National Insurance on profits over £12,570 at 9% (or 2% over £50,270)

A safe estimate is to add 20–25% of your income target for tax. So for our £40,000 example, that’s around £10,000.

Total earnings target: £50,000

Step 4: Calculate Your Billable Hours

You may work 35–40 hours per week, but not all of that is billable. You’ll also spend time on:

• Admin and invoicing
• Marketing and business development
• Training and upskilling
• Holidays and sick days

A realistic figure for many freelancers is 50–60% billable time. Assuming 46 working weeks per year and 25 billable hours per week:

25 × 46 = 1,150 billable hours per year

Step 5: Final Hourly Rate Calculation

Now divide your total earnings target by your annual billable hours:

£50,000 ÷ 1,150 hours = £43.50 per hour

This is your minimum sustainable hourly rate – it covers your income, expenses and taxes. You can now adjust it depending on:

• Value delivered
• Project type
• Client size or industry
• Specialisation or scarcity

Common Pricing Models: Hourly vs. Daily vs. Project

Freelancers in the UK typically price their services in one of the following ways:

1. Hourly Rate

Best for ongoing support, technical tasks, or flexible work. Easy to track and invoice, but can penalise efficiency.

2. Daily Rate

Useful for consultants, creative professionals or on-site work. Offers more income predictability.

Tip: Your daily rate is usually 7-8 × your hourly rate.

For a £43.50 hourly rate, your daily rate could be around £300-£350.

3. Fixed Project Fee

Ideal for defined deliverables. Allows you to price based on value rather than time.

Factors That Can Influence Your Rate

While calculating your minimum sustainable rate is a smart starting point, it shouldn’t be the only factor in setting your freelance prices. Real-world variables can and should influence what you charge. These are some of the key factors to consider when tailoring your rates to reflect your true value and the needs of your clients.

1. Experience and Skill

Your level of experience is one of the most powerful rate influencers. If you’ve spent years honing your craft, earned industry-recognised qualifications, or have a portfolio of successful projects, you can justify charging more than someone just starting out.

Specialist skills, such as technical SEO, UX design, financial forecasting, or regulatory compliance command higher rates because they’re in shorter supply and provide measurable business benefits.

You may also want to highlight:

• Professional certifications (e.g. ACCA, CIM, Google Ads)
• Awards or industry recognition
• Case studies showing proven results

Clients are often willing to pay a premium for trusted expertise, especially when it reduces their risk and shortens project timelines.

2. Niche or Industry

Not all industries value freelance services equally. Highly regulated or high-stakes sectors (such as finance, law, IT, healthcare, and engineering) tend to pay more, reflecting the need for specialist knowledge and the consequences of errors.

For example:

• A freelance copywriter working in the legal or fintech space will typically earn more than one writing lifestyle blog content.
• A graphic designer working on a corporate rebrand will charge more than one designing flyers for a local café.

Research typical rates for your industry using:

• YunoJuno’s Freelance Rates Reports
• Sector-specific job boards (e.g. Tech Nation Jobs, Creativepool)
• Peer groups on LinkedIn or Slack communities

If your niche requires niche business insurance (e.g. professional indemnity) or legal compliance, factor that into your pricing too.

3. Client Type

The nature of your client can also shape your rate. For example:

• Startups and micro-businesses often have limited budgets and look for flexible or phased payment terms
• Large corporations may be able to pay more, but they often expect higher levels of reporting, procurement processes, or paperwork

Don’t hesitate to adjust your rates depending on:

• The size and budget of the client
• The project’s scope and strategic importance
• The expected turnaround time and decision-making speed

Some freelancers create tiered pricing such as one for corporate work, another for charities or SMEs. Just ensure your structure remains transparent and justified.

4. Value-Based Pricing

Rather than charging for time, value-based pricing means charging based on the business benefit you deliver. This is often more profitable than hourly billing and reflects your work’s true impact.

For example:

• A web developer who builds an ecommerce site generating £250,000 in sales may charge £10,000+, even if the work takes 100 hours.
• A brand consultant rebranding a national charity could charge a fixed project fee based on visibility, not just hours worked.

This approach is best suited to experienced freelancers with clear deliverables and a strong track record. To apply value-based pricing, ask yourself:

• How much time or money will I save the client?
• Will this project directly increase their revenue or reduce risk?
• What would it cost the client to do this in-house?

To avoid undervaluing yourself, ensure your proposal outlines the benefit, not just the deliverables.