Pricing is the part of freelancing nobody trains you for. You can be brilliant at the work and still underearn for years because you guessed at a number once and never revisited it. The good news is that pricing is mostly arithmetic plus a few judgement calls. This guide walks through both, with realistic figures in pounds so you can copy the method and swap in your own numbers.
The central question is hourly vs project pricing. Hourly bills your time; project (fixed) pricing bills the outcome. Neither is "better" in the abstract - they suit different jobs and different clients. But both depend on one thing first: knowing what an hour of your time genuinely needs to earn.
Start with your real hourly rate
Most freelancers pick a rate by glancing at what someone else charges. That tells you nothing about whether it covers your life. Work it out from the bottom up instead.
Start with the salary you want to take home in a year. Say that is £40,000. Now count your actually billable days. There are roughly 250 working days in a year, but you will lose time to holidays, illness, admin, marketing, invoicing, and chasing clients. Assume around 25 hours of genuinely billable time per week and roughly 46 working weeks, which is about 1,150 billable hours a year - far fewer than the 1,950 a full-time job implies.
Then add your costs. Software, hardware, insurance, accountant, pension, training, a co-working desk: for many solo freelancers that is £6,000 to £10,000 a year. And do not forget tax and National Insurance - the figure you bill is not the figure you keep.
A rough sum: take your target salary, add overheads, then add a buffer for tax (treat a meaningful slice of revenue as never yours), and divide by your billable hours. With £40,000 take-home, £8,000 of costs, and tax accounted for, you are realistically looking at a billing rate north of £55 to £65 an hour just to stand still. If that feels high, it is because the gap between a quoted rate and take-home pay is always wider than people expect. The free Freelance Rate Calculator does this sum for you in seconds.
Hourly, fixed-project, and retainer compared
| Model | Pros | Cons | Best for |
|---|---|---|---|
| Hourly | Low risk; you get paid for every hour; easy to adjust scope | Income capped by hours; punishes you for being fast; clients fixate on the clock | Open-ended work, support, unclear scope, new clients |
| Fixed project | Rewards efficiency; clear price up front; sells outcomes not time | You absorb the cost of bad estimates and scope creep | Well-defined deliverables you have done before |
| Retainer | Predictable monthly income; deeper client relationship | Can drift into unlimited demands; needs firm boundaries | Ongoing work, maintenance, a trusted regular client |
When to use each
Use hourly when you cannot see the edges of the work. Discovery phases, "can you just take a look at this", ongoing tweaks, and anything where the client keeps changing their mind are all safer by the hour. Hourly protects you when the scope is fog.
Use fixed project when the deliverable is concrete and you have built something similar before. A five-page marketing site, a brand identity, a defined set of illustrations: you know roughly how long these take, so a fixed price lets you charge for the result and quietly profit from your own speed. Clients usually prefer it too, because they know the number before they commit.
Use a retainer when a client needs you reliably every month. It smooths your income and theirs, but only works with a clear cap - so many hours or so many deliverables per month, with anything beyond billed separately.
Do the maths instantly
The free Freelance Rate Calculator finds the rate you need; the Project Quote Calculator turns it into a fixed price with margin.
Open the rate calculatorHow to turn an hourly rate into a fixed price
A fixed quote is just your hourly rate dressed up with some honest padding. Build it in four steps.
1. Estimate the hours. Break the project into tasks and estimate each one. Add the unglamorous parts people forget: kick-off calls, revisions, exports, handover, and email. If a site build is 30 hours of "real" work, the wrapper around it is easily another 8 to 10.
2. Add overhead. Your hourly rate may already include costs, but project-specific extras - stock assets, fonts, a plugin licence, a subcontractor - get added on top at their real cost.
3. Add contingency. Estimates are optimistic. Add 15 to 25 percent to the hours to cover the things you cannot foresee. The less familiar the work, the bigger this buffer should be.
4. Add margin. This is profit beyond simply paying yourself - the reward for taking on fixed-price risk and the cushion that lets the business grow. A 10 to 20 percent margin on top is reasonable.
So: 40 estimated hours at £60 is £2,400. Add 20 percent contingency (£480) and a 15 percent margin (around £430), plus £150 of assets, and you quote roughly £3,460. Round it to a clean number and present it as one price, not a line-by-line breakdown of your maths. The Project Quote Calculator runs exactly this stack for you.
Common pricing mistakes
Quoting before you understand the scope. A number given in the first five minutes is a guess, and you will live with it. Ask questions first.
Charging for time instead of value. If your work earns a client £50,000, an hourly invoice that comes to £1,200 leaves enormous value on the table. Outcomes are worth more than hours.
No deposit and no payment terms. Take a deposit before you start - 30 to 50 percent is normal - and put payment dates in writing. Cash flow kills more freelancers than poor work does.
Letting scope creep go unbilled. "Can you just also..." is how a profitable project turns into a loss. Note out-of-scope requests and quote them as extras.
Never raising your rates. Your costs and skills rise every year. If your rate does not, you are quietly taking a pay cut. Review it at least annually.
Protect the margin after you win
Winning the project at the right price is only half the job. The margin you carefully built into the quote gets eroded later - by scope creep, slow approvals, and chasing payment. That is the part good client operations protect. Keeping requests, approvals, and invoices in one tidy place is what SignalDesk is built for, and a solid set of templates - proposals, contracts, and change-request forms - stops the small leaks before they start. Price well, then defend the price.