How to price a freelance project

Pricing goes wrong in two directions. Guess low and you end up working weekends for less than minimum wage. Guess high without a reason and the client can't see what they're paying for. A price built from tasks and a known rate is easy to defend and easy to adjust when the client pushes back.

Step 1: know your floor rate

Your hourly rate has to cover more than your take-home pay. As a US freelancer you pay 15.3% self-employment tax on most of your profit, plus income tax, your own health insurance and retirement savings, software, equipment, and every hour spent selling, invoicing and doing admin. Only some of your working hours are billable; 50% to 70% is typical once you count sales and admin.

Example: you want $80,000 a year after expenses, expect $8,000 in business costs and set aside 30% for taxes. That's ($80,000 + $8,000) / 0.70 = about $125,700 in revenue. At 46 working weeks and 25 billable hours a week (1,150 hours), your floor rate is about $109 an hour. The freelance rate calculator does this math with your own numbers.

Step 2: estimate the work task by task

Break the project into tasks small enough to estimate, and estimate each in hours. Big tasks hide surprises. A website for a small business might look like this:

Discovery call and sitemap ................  4 h
Wireframes, 5 pages ........................  8 h
Visual design, 5 pages, 2 revision rounds .. 18 h
Development and responsive testing ........ 24 h
Content entry and basic SEO setup .........  6 h
Launch and 30-minute training .............  3 h
Project management and meetings ...........  5 h
Subtotal .................................. 68 h
Buffer, 20% ............................... 14 h
Total ..................................... 82 h

82 h x $110/h = $9,020
Stock photos and premium plugin (at cost) .. $240
Project price ............................. $9,260 (round to $9,300)

The buffer isn't padding. It's the time every project takes that nobody plans for: extra emails, a revision that's really a new idea, waiting for content. Use 15% for work you've done many times and 25% or more for something new. Then check the estimate against your past projects; if you track time, your real hours are the best evidence you have.

The project cost calculator adds hours per phase, expenses and a revision buffer, and shows the quote total and what each hour really earns.

For hours you've already worked, the time card calculator totals start and end times for the week.

Step 3: choose a pricing model

• Hourly: you bill the hours you work. Low risk for you and fair when scope is unclear, such as ongoing support or consulting. The downside: getting faster earns you less, and clients may watch the clock.
• Fixed price: one price for a defined scope. Clients like knowing the number, and you keep the gain if you work efficiently. The risk is scope creep, so the scope section needs limits and a line saying extra work is quoted separately.
• Value-based: the price follows what the result is worth to the client. If a new checkout flow is expected to add $200,000 in yearly sales, $20,000 can be a fair price even if it takes 60 hours. This needs a client who can share the numbers and work where you can tie your output to a result.
• Retainer: a monthly fee for a set number of hours or a defined service, with a notice period. Good for steady work after a first project.

Step 4: present options

Two or three options give the client a choice between versions of working with you, instead of yes or no. Keep the differences real:

• Essential, $6,800: 3 pages, one revision round, template-based design.
• Standard, $9,300: 5 pages, two revision rounds, custom design (the estimate above).
• Extended, $12,400: 8 pages, two revision rounds, custom design, plus 3 months of updates (4 hours a month).

Show each option as a pricing table with one line per phase, so the client can see where the money goes. If they push back on price, remove a line rather than lowering your rate. Cutting scope keeps your rate intact; a discount trains the client to ask for one every time.

Pricing a retainer

A retainer is a monthly fee for a set amount of work: for example 20 hours of design and development a month for $2,000. Price it from your rate, then decide what happens to unused hours (most freelancers let a few roll over for one month at most) and to extra hours (billed at your normal rate, or slightly above). Add a response time, a minimum term such as three months, and a notice period of 30 days. Retainers trade a little rate for predictable income, so don't discount more than 10% for one.

Mistakes that cost freelancers the most

• Quoting on the call. Say you'll send a proposal within a day; you'll price better with the task list in front of you.
• Pricing only the deliverable and forgetting meetings, email and project management, which often take 10% of a project.
• Letting "a few small changes" in without a quote. Small changes add up to a week.
• Matching the cheapest bid. Clients comparing on price alone tend to be the hardest to please.
• Never raising rates. Review them once a year and apply new rates to new projects first.

Step 5: set terms that protect the price

1. A deposit of 25% to 50% before work starts.
2. A clear number of revision rounds, with the hourly rate for extra rounds.
3. A change process: new requests get a written quote first.
4. An expiration date on the quote, typically 14 to 30 days, so old prices don't come back months later.
5. Payment terms and a late fee, repeated on each invoice.

Doing it in SoloWOS

In Proposals, the pricing table adds up line items and quantities for you, and you can set a "valid until" date so an expired proposal can't be accepted. You see when the client opens it and how often, and they accept online. Time Tracking records real hours per project, which makes your next estimate better, and from an accepted proposal you can create an invoice with the line items filled in, then adjust it to bill the deposit. Our proposal template and how to write a freelance proposal cover the document itself.