Setting your hourly rate starts with your own numbers, not with what others charge: your living costs, taxes, unpaid time and the value of the work. Market data tells you what is possible; your costs tell you what is necessary. You need both.
The short answer: calculate a minimum rate from your yearly income target, costs, taxes and billable hours; research market ranges for your specialty and the client’s country; set a target rate between the two; and test and raise it. This guide gives the method and an example with invented numbers, because real rates change by market, experience and year.
The numbers in this guide are invented examples to show the method, not market data or recommended rates. Tax and social security figures depend on your situation. Check current market rates from several sources and ask your gestor to confirm your tax assumptions.
Key takeaways: hourly rate
- Start your hourly rate from your costs, taxes and billable hours, then compare with the market.
- Only part of your working time is billable, often well under 100%.
- Rates vary by specialty, experience, client country and project type.
- Charge by project or retainer when the value is clearer than the hours.
- Review your rate at least once a year and raise it for new clients first.
In this guide
- Key takeaways: hourly rate
- Step 1: calculate your minimum hourly rate
- Step 2: research the market for your hourly rate
- Step 3: choose your target hourly rate
- Hourly rate vs project price
- Currency and costs when you set your hourly rate
- How to raise your hourly rate
- Common mistakes to avoid
- Frequently asked questions about hourly rate
- Final thoughts on hourly rate
- Sources and further reading
- Related guides
Step 1: calculate your minimum hourly rate
- Net income you need: the yearly amount you want to take home. See how to pay yourself a salary.
- Add taxes and social security: use a realistic rate. See how much tax freelancers pay in Spain.
- Add business costs: software, equipment, insurance, accountant and platform fees.
- Add savings: an emergency fund and retirement.
- Estimate billable hours: subtract holidays, sick time, admin, marketing and gaps between projects.
- Divide the total by billable hours.
| Item (invented example) | Amount |
|---|---|
| Target net income per year | €30,000 |
| Taxes and social security (assumed share) | €10,000 |
| Business costs | €3,000 |
| Savings and buffer | €2,000 |
| Total revenue needed | €45,000 |
| Billable hours (about 1,000 a year) | 1,000 |
| Minimum hourly rate | €45 |
Many freelancers bill far fewer hours than they work. If you assumed 1,800, the rate would look much lower and you would be underpaid.
Step 2: research the market for your hourly rate
- Look at several sources: platform listings, salary and rate surveys, community discussions and job posts.
- Compare similar work: same specialty, experience and type of client.
- Separate countries: clients in the US, UK and Northern Europe often budget differently from Southern Europe or Latin America.
- Distinguish employee salaries from freelance rates: a freelance rate must cover costs, taxes and unpaid time.
Do not rely on one source or on old figures. Check the date and the sample size.
Step 3: choose your target hourly rate
| Situation | Position in the range |
|---|---|
| New to a niche, building reviews | Near the minimum, but not below it |
| Solid experience, steady demand | Mid-range |
| Specialist with proven results | Upper range |
| Rush work or complex projects | A premium |
Hourly rate vs project price
Hourly rates are simple, but they reward slow work and limit your income. Project prices and retainers reward speed and expertise. Use your hourly rate to estimate the project price, add a margin for risk and revisions and present the price as a package. See how to negotiate rates with US and European clients.
Currency and costs when you set your hourly rate
If you quote in dollars or pounds, remember exchange rates and conversion fees. See how to manage exchange rate risk and the best exchange rate for freelancers. Platform fees also reduce what you keep: compare freelance platforms.
How to raise your hourly rate
- Raise it for new clients first.
- Give existing clients notice, for example 30 to 60 days.
- Present the increase with results and a clear date.
- Raise it after every strong project or milestone.
- Accept that you may lose a few price-sensitive clients.
Common mistakes to avoid
- Setting the rate from an employee salary divided by hours.
- Assuming that all working hours are billable.
- Forgetting taxes, costs and unpaid time.
- Copying competitors without knowing their situation.
- Never raising the rate.
- Discounting without a reason or a trade-off.
Frequently asked questions about hourly rate
How do I calculate my hourly rate as a freelancer?
Add your target net income, taxes, business costs and savings, then divide by realistic billable hours.
How many billable hours should I assume?
Often far fewer than full-time hours, because of admin, marketing, holidays and gaps. Use your own data.
Do rates differ by country?
Yes. Clients in different markets budget differently. Research your specialty and target market.
Should I charge hourly or by project?
Hourly is simple, but project pricing often rewards expertise better.
How often should I raise my rate?
At least once a year, and for every new client when demand is strong.
Where do I find market rates?
Use several sources, such as platform listings, surveys and community data, and check the dates.
Final thoughts on hourly rate
A good hourly rate comes from your numbers first and the market second. Calculate a minimum from income, taxes, costs and billable hours, research your specialty and target market, set a target rate and raise it regularly. Where the value is clear, move from hours to project prices.
Sources and further reading
- Agencia Tributaria (Spanish tax agency)
- Seguridad Social: régimen de autónomos
- Eurostat: labour market statistics
Related guides
- How to Negotiate Rates with US and European Clients
- Pay Yourself a Salary as a Freelancer with Variable Income
- How Much Tax Do Freelancers Pay in Spain on €30,000, €50,000 and €80,000?
- Freelancer Income in Dollars: How to Estimate Earnings by Specialty
Disclaimer: This article is for general information only and is not tax, legal or financial advice. Rules, fees and thresholds change often and differ by country; always confirm current details with the tax authority and a qualified adviser. Some links may be affiliate links, which means we may earn a commission at no extra cost to you.