So You Can Do the Work — But What Do You Charge for It?
You have a skill people will pay for: design, writing, bookkeeping, social media, photography, tutoring, web setup, video editing, or something else entirely. A friend of a friend asks your price. Your stomach drops. You blurt out a number that feels safe, they say yes instantly, and you spend the next two weeks resenting the project because the pay does not match the effort.
Welcome to the most common first-freelancer mistake: pricing from fear instead of from math. New freelancers almost always undercharge, and not by a little. They price as if they were still an employee, forgetting that freelancers pay their own taxes, cover their own tools and downtime, and spend unpaid hours finding clients, quoting work, and doing admin. The client is not getting a bargain when you undercharge — you are quietly subsidizing their business with your evenings and weekends.
What “Pricing a Service” Actually Means
Pricing a freelance service is not picking a number that sounds impressive or picking one that sounds cheap enough to win the job. It is answering three questions in order: What do I need to earn? How many hours can I realistically bill? And what is the value of the finished result to the client?
There are two main ways freelancers charge: hourly and project-based (sometimes called flat-rate or value-based). Hourly is simple and transparent, and it suits open-ended work like ongoing social media management or virtual assistance. Project pricing suits defined deliverables — a logo, a website, a set of ten blog posts — because the client knows the total cost upfront and you are rewarded for working efficiently rather than slowly. Most successful freelancers use both: an hourly floor behind the scenes, and project quotes on the surface. That combination is what this guide builds toward.
Step 1: Calculate Your Hourly Floor
Your hourly floor is the lowest rate you can accept without quietly losing money. Here is how to find it, step by step.
First, set a gross revenue target for the year. This is not your salary — it is everything your freelance business needs to bring in before taxes and expenses. Be honest but reasonable for a first year. A target of $60,000 a year is a useful working example: ambitious enough to live on in many Canadian cities, modest enough to be reachable part-time-plus.
Second, estimate your billable hours — the hours clients actually pay for. This is where beginners go wrong, because they divide by 40 hours a week, 52 weeks a year, as if every hour were billable. It is not. You will spend time prospecting, quoting, revising, invoicing, learning, and taking holidays. A realistic first-year assumption is 25 billable hours a week for 46 weeks, allowing for holidays, sick days, and slow periods. That gives 25 × 46 = 1,150 billable hours a year.
Third, divide. $60,000 ÷ 1,150 hours = $52.17 per hour. That is your base rate before business costs — the rate that hits your income target if, and only if, you actually bill those 1,150 hours.
Fourth, add your business expenses. Software subscriptions, a laptop replacement fund, internet and phone costs, insurance, marketing, and accounting add up. Suppose yours total $300 a month, or $3,600 a year. Spread over the same 1,150 hours, that is $3,600 ÷ 1,150 = $3.13 per hour. Your cost-covered rate is now $52.17 + $3.13 = $55.30 per hour.
Round up, not down. A floor of $55.30 becomes a working floor of $60 per hour — the rounding gives you a small cushion for unpaid admin time, late payments, and the months when billable hours fall short. That $60 is your floor, not your quote. It is the number below which you politely decline, no matter how tempting the project sounds.
Step 2: Turn the Floor Into a Project Price
Clients usually prefer a project price, and you should usually prefer to give them one — provided the project price is built on your hourly floor, not invented.
Start by scoping the work in writing: the deliverable, the number of revision rounds, the deadline, and what is not included. Then estimate the hours honestly, including the unglamorous parts: discovery calls, research, revisions, file delivery, and admin. Beginners routinely estimate only the fun, creative hours and forget the rest. A good rule is to estimate the hours, then add 25% for the parts you forgot. If you think a project takes 8 hours, quote it as 10.
Then multiply. At a $60 hourly floor, a 10-hour project prices at 10 × $60 = $600. That is your project floor. Quote at or above it, and state what the client gets for it. If the project is small but high-value — say, a sales page that could bring a business thousands of dollars — you can price above the floor to reflect that value, and many experienced freelancers do. But never price below the floor because the project “seems small.” Small projects still consume your scarcest resource: your time.
Here is the full illustrative example, with all the math in one place, so you can copy the method with your own numbers:
- Gross revenue target: $60,000 per year
- Billable hours: 25 hours per week × 46 weeks = 1,150 hours
- Base rate: $60,000 ÷ 1,150 = $52.17 per hour
- Business expenses: $300 per month × 12 = $3,600 per year, or $3,600 ÷ 1,150 = $3.13 per hour
- Cost-covered rate: $52.17 + $3.13 = $55.30 per hour
- Working hourly floor: $60 per hour (rounded up for cushion)
- Example project: estimated 8 hours, plus 25% buffer = 10 hours
- Project floor price: 10 × $60 = $600
- Taxes set-aside: put 25% of every payment aside in a separate account, so a $600 payment means $150 set aside for taxes and $450 available for everything else
Step 3: Quote With Confidence (and in Writing)
A quote is not just a number; it is a short, professional document that protects both sides. A good first quote fits in a few lines: what you will deliver, by when, for how much, how many revision rounds are included, when payment is due, and what happens if the scope changes.
Use this structure for your first quotes: “I will deliver [specific deliverable] by [date], including [number] revision rounds, for $[project price], with 50% due upfront and 50% on delivery. Additional revisions or scope changes are billed at $60 per hour.” The deposit matters enormously for beginners. It filters out clients who were never serious, it covers you if a project stalls, and it changes the dynamic from begging for payment to running a business. If a client refuses any upfront payment, that is information — and usually a reason to walk away.
Step 4: Handle “Can You Do It Cheaper?” Without Caving
Sooner or later — usually sooner — a prospective client will ask for a discount. This is normal, and it is not an insult. How you answer it determines whether your rate survives contact with reality.
Never cut the price while keeping the scope the same. That teaches the client that your first number was inflated, and it teaches you that your floor is negotiable. Instead, trade scope for price: “I can do a shorter version for that budget — one revision round instead of two, and delivery in three weeks instead of one. Would that work?” If they accept, you have a smaller project at your real rate. If they decline, you have protected your floor without an argument.
Two other responses are worth having ready. The first is the payment-plan offer: the same total price, split into instalments, which helps clients with cash flow without reducing your pay. The second is the polite decline: “I understand that budget does not work for you — I would rather pass than deliver work I cannot do well at that price.” Saying no to one underpriced project is often what frees you to say yes to a properly priced one the following week.
Common Mistakes That Keep Beginners Underpriced
The first mistake is charging what you earned as an employee. An employee earning $30 an hour costs their employer far more than $30 once benefits, taxes, equipment, and paid time off are included — and the employee does not spend unpaid hours finding their next job. Your freelance rate must cover all of that, which is why the hourly floor math above lands so much higher than an old paycheque.
The second mistake is pricing by the hour when the client cares about the outcome. A client who needs a booking page that will take reservations all year does not care whether it took you six hours or sixteen. Once you have a floor, learn to quote the project and the result, not the hours. The floor protects you; the project price lets you capture value.
The third mistake is unlimited revisions. Every revision round should be counted and limited in the quote. “Unlimited revisions until you are happy” sounds generous and becomes a trap: the project never ends, the effective hourly rate collapses, and both sides end up frustrated. Two rounds is a sensible default for most first projects.
The fourth mistake is working without a deposit or a written agreement. Verbal deals and “pay me when it is done” arrangements are how beginners end up doing free work for strangers. A short written quote, accepted by email, plus a deposit, prevents most of it.
Frequently Asked Questions
Hourly or project pricing — which should I start with?
Start with an hourly floor for your own math, and quote projects to clients whenever the deliverable is well defined. For ongoing, open-ended work, hourly billing with a weekly cap or a monthly retainer is cleaner. Either way, the floor is what keeps you honest.
What if a client says my price is too high?
Thank them, offer a smaller scope at their budget if that works for you, and let them decide. A price objection is usually a budget or fit issue, not a verdict on your worth. The clients who value the work will pay the rate; your job is to find more of them, not to convince the ones who cannot.
How do I handle taxes as a freelancer?
Set aside a percentage of every payment in a separate account — 25% is a common planning figure — and track your income and expenses from day one. Tax rules, thresholds, and deductions depend on where you live and how much you earn, so speak with an accountant or tax professional before your first tax season, not during it.
Final Thought
Pricing your first freelance service is not about finding a magic number. It is about doing honest math once — your target, your real billable hours, your real costs — and then trusting the floor that math gives you. At $60 an hour in the example above, a $600 project is not expensive. It is simply what the work costs when done by someone who pays their own taxes, buys their own tools, and still needs to eat.
This article is general information only and is not personalized financial, tax, or business advice. Tax rates, deductions, and self-employment rules vary by jurisdiction — confirm what applies to you with a qualified professional.
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Happy Budgeting!
Stanley
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