How to set your freelance rate: a simple sum that covers holidays, costs and quiet weeks

By SendPay Business · 29 September 2026 · 2 min read

Most new freelancers take their old salary, divide by 37.5 hours a week, and charge that. It almost always leaves them short. Here's a sum that doesn't.

Start from the income you wantAdd what the business costsCount the hours you can really bill

Start from the income you want

Pick the yearly income you want before tax. That's the number your rate has to produce, not your old hourly pay.

Add what the business costs

Laptop, software, insurance, phone, travel, an accountant, training, and the card fees taken from what clients pay you. Add them up for a year and put them on top of the income.

Count the hours you can really bill

This is where most people go wrong.

Take 52 weeks and remove holidays, bank holidays, sick days and quiet weeks. Six to eight weeks off is common.
Decide how many hours a week a client actually pays for. Admin, quotes, invoicing and finding work are unpaid, so 20 to 30 billable hours is typical.
Multiply the two. That's your billable hours for the year.

Divide, then sense-check

Income plus costs, divided by billable hours, is your minimum hourly rate. Multiply by the hours in your working day for a day rate. If it looks high, that's normal: it's paying for the time nobody else pays for.

Then check it against what clients in your field pay. If the market pays less, work on cutting unbillable time or niching down rather than just dropping the rate.

Get paid on time

A good rate only helps if the money arrives. Put clear payment terms and a due date on every invoice, and give clients an easy way to pay by card.

Build it

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Questions people ask

Can I just use a calculator?

Yes. The free hourly rate calculator does this sum for you from your own numbers.

Open the hourly rate calculator →

Should I charge by the hour or by the day?

Day rates are simpler for longer jobs and stop clients counting minutes. Hourly suits small, unpredictable tasks. Many freelancers quote a fixed price per project based on their day rate.

Does the rate include tax?

The income figure is before tax, so income tax and National Insurance come out of it. If you're VAT registered, add VAT on top of your rate on the invoice.