How to calculate your day rate as a first-time freelancer

It seems like a simple question: how much do you charge? But for many freelancers, setting a rate feels less like a straightforward calculation and more like an existential crisis. In this guide, we break it down with industry insights and advice from three seasoned freelancers – Eugene Ekuban, Arlo West and Agnes Boman – to help you set a rate that reflects your worth.

Freelancing sounds like a fairytale: flexible hours, creative freedom, being your own boss. But setting your rate can throw up a classic Goldilocks problem. Are you asking for too much? Are you being paid too little? What amount is just right?

Figuring it out isn’t easy – and since money can be a loaded topic, anxiety and imposter syndrome often sneak in. Before you know it, you’ve plucked a number out of thin air or nodded along to whatever your client says. It’s stressful enough for experienced freelancers, let alone a newcomer trying to set their day rate for the first time. The good news is that it isn’t actually all that bewildering. Plenty of creatives have done it before – and with a bit of guidance, you too can ensure your price is right.

Why setting a rate matters

Before we jump into the numbers, let’s take a step back and consider the bigger picture. Your rate is more than just a figure: it’s a reflection of the time, energy and expertise you bring to the table.

While it might seem to centre on monetary compensation, it’s also a clear signal – to both yourself and others – about the inherent value of your creative work. “It’s important to remind yourself that the client isn’t doing you a favour by hiring you,” says Agnes Boman, a freelance illustrator based in Glasgow. “Intellectually, I’ve always known this, but I couldn’t shake the feeling that somehow I was being hired out of kindness.”

There are lots of ways that you can go about pricing your work, from project fees to hourly wages. But if you’re an emerging creative, a day rate is a great starting point. Widely used, relatively straightforward and easy to adjust, it frees you from constantly tracking hours or worrying about confusing payment systems.

How to calculate your day rate

At first glance, setting your rate might seem simple: just divide a suitable salary into a daily rate, right? But as a freelancer, you’re not just an employee. You operate as your own business. From sick days to equipment costs, there’s more to account for than just a salary, and it’s crucial to build these in when setting a rate. Don’t worry though – we’ll walk you through each step of the process.

🧮 Step one: Research pay rates

First thing’s first: do your research. Knowing what others in your field are earning is an important starting point, as it gives you a benchmark in order to set your own salary goal. Job sites like Glassdoor and Indeed compile the average pay for different roles and experience levels.

In addition, annual salary reports from recruitment firms – such as Major Players’ Creative Industries Census and Represent’s Salary Survey – highlight industry-specific trends, giving you a better sense of the typical compensation in your area of work. If you want insights from certain companies, you can also consider reaching out to HR (human resources) departments and inquire about their freelance rates.

💵 Step two: Define your pay target

Using your research, work out what your equivalent salary would be according to your skills and seniority level. Before you land on a number, consider factors like lifestyle, location and personal needs. For instance, if you’re living in London, you’ll likely need to budget more for rent and transportation.

🖇 Step three: Account for business costs

Once you’ve settled on your desired salary, the next step is accounting for overhead costs. Think of it this way: just like a company has business expenses, so do you.

“You have to consider everything that would usually be resolved by a human resources team”, says Eugene Ekuban, a London-based freelance designer. It can seem like a lot, but getting on top of your finances can make handling these logistics much easier. By thinking of yourself as both a creative professional and a small business, you’ll be able to set a day rate that accurately reflects the true cost of your work.

Calculate your studio costs
Whether it’s subscription fees for creative software or rent for your studio space, everything that supports your work counts as a business expense.

Don’t forget taxes
Unlike salaried employees, freelancers pay their tax in one lump sum at the end of the year rather than deducting it from their monthly pay check. It’s essential to budget for this to avoid any surprises come tax season.

If you’re just starting out and don’t have a clear idea of your tax obligations yet, the Association of Independent Professionals and the Self-Employed (IPSE) recommends keeping around 25% to 30% of your earnings in savings, to cover tax-related costs.

Account for slow periods
It’s also important to consider the fact that, as a freelancer, you probably won’t be working every week of the year. There will be periods when you’re searching for work or pitching clients, and times when you’re off sick or on holiday. Due to those gaps, you’ll likely work fewer than the average 220 working days in a year – and all that “non-billable time” also comes into play when calculating your rate.

🧠 Step four: Do the math

Now that you’ve got your salary target, added costs and billable days, you’re ready to work out your rate. You can use rate calculators from platforms like Freelance Solutions and Virtual HQ, or try this basic formula:

(Desired Salary + Business Expenses) ÷ Billable Days = Day Rate

If seeing an equation makes you feel lost, below is an example to make things clearer.

There you have it! Try it out for yourself to see what your ideal rate comes out to.

Read around, ask around

Got your magic number? You might also want to check if you’re on the right track by speaking to other freelancers. “Getting first-hand information and data will be more beneficial and representative of the real world than any links and articles,” says Arlo West, a Manchester-based creative and graphic designer. “Ask others around you without feeling worried that you look ‘junior’ or ‘naive’. We were all starting out once.”

Crowdsourcing rate information can be especially valuable for people who are underrepresented in the industry, as they often face an identity pay gap. A survey done by Major Players, for instance, found that men take home nearly 16% more freelance pay than women, and that non-white ethnic groups received an average of £23 less than their white counterparts.

Joining groups on social media or consulting databases like TheGoodList’s Freelancer Rates Report can give you valuable insights about what other freelancers are charging. Just be cautious about comparing your rates to those on marketplaces like Upwork or Fiverr: prices there are often driven down by intense competition and platform fees.

In the end, it all comes back to research. Read around, ask around and get a broad sense of the freelance landscape so that you can make the most informed decisions when setting your rates.

Factors to consider when fine-tuning your rate

Once you’ve got a price, it may seem fixed, but in reality there are many circumstances that can influence how much you eventually charge.

👆Elements that can increase your rate

Some factors that might mean increasing your rate include:

👇 Elements that can lower your rate

Other considerations may lead you to lower your rate, such as:

🤏 Keep a minimum in mind

With this in mind, it’s important to stay mindful of your minimum viable rate – the lowest amount you can accept without harming your business.

Be clear when you’re offering a discount
Agnes offers a valuable tip on how to handle this: “If I decide to give a client a discount, I always make it clear that it’s a special favour and not a standard practice,” she says. One way to communicate this is by including your standard rate on the invoice and then showing the discount applied. This ensures transparency and avoids the risk of undervaluing your usual fees.

How to communicate with clients confidently

Having worked out your rate and factored in the variables, there’s one important step left: telling your clients. Conversations about pricing can feel awkward, tricky, and even intimidating – but with the right approach, you’ll be able to navigate them much more smoothly.

🤝 Set expectations and ask questions

The key to communicating your rates is establishing expectations. One of the biggest challenges in pricing a job is the gap between what clients expect and what you can realistically deliver.

For example, a client might assume a fast turnaround for a project, but you think that it’ll take more time to produce work of high quality. At this stage it’s important to ask detailed questions about the project, how much work is involved, the timeline, deadlines and what you need to deliver.

📝 Get a contract

As well as meeting to ask these questions, it’s crucial to request a written contract with key information and expectations. By setting clear expectations from the start, you not only avoid surprises but also ensure that both parties are aligned with each other.

✋ Expect pushback

It’s perfectly normal to experience pushback on your rates too. Price negotiations are part of the process, so treat them as practical discussions instead of personal conflicts.

Start with a higher rate
If a client asks for a lower rate that you’re not comfortable with, try explaining your rationale and using testimonials to back up your case. A helpful strategy is to start with a higher ballpark figure, as it’s much easier to reduce it than to raise it later – as Eugene explains, “Most of the time a high ballpark figure will get negotiated down, rather than straight up rejected.”

Ask the client their budget
In fact, you don’t always have to give a number right away. Agnes learnt this by experience: “If you suggest a figure first, you might risk underselling yourself.” Instead, ask the client about their budget and tailor your offer accordingly. This way, you avoid capping your earnings from the outset.

Why your rate is a moving target

And there you have it: your day rate. If there’s one thing to take away from all this, it’s that setting your rate goes beyond crunching numbers – it’s also a matter of confidently valuing your work. As your skills and experience evolve, so should your fees, which is why it’s important to regularly review them.

We may have focused on rates for first-time freelancers, but the strategies will serve you well at any stage of your freelance journey. So, what do you reckon – ready to get pricing like a pro?

Resources

Looking for more guidance on setting your day rate? Check out these resources:

Salary Reports and Surveys:

Day Rate Calculators:

Articles:

Stickers designed by Sam Lee.