Determine exactly what to charge clients per hour, day, and monthly retainer. Account for self-employment taxes, overhead, vacation, and non-billable hours.
The most common mistake new freelancers, consultants, and contractors make is dividing their former corporate salary by 2,080 (40 hours × 52 weeks). This calculation overlooks the harsh reality of self-employment: you do not get paid for holidays, sick days, vacations, client pitches, proposal writing, or administrative accounting.
In reality, full-time freelancers average only 1,000 to 1,200 billable hours per year. Furthermore, you must fund your own health insurance, retirement accounts, software licenses, laptop hardware, and self-employment taxes (which doubles your payroll tax burden in jurisdictions like the United States).
| Billing Model | Best For | Pros | Cons |
|---|---|---|---|
| Hourly Rate | Uncertain scope, maintenance, ad-hoc tasks | Guaranteed pay for extra hours | Penalizes speed and efficiency |
| Day / Sprint Rate | Design sprints, on-site consulting | Predictable calendar scheduling | Full-day commitment required |
| Monthly Retainer | Ongoing SEO, dev support, content | Consistent monthly recurring cash flow | Requires strict boundaries to avoid creep |
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