The most common mistake new freelancers make isn’t bad proposals, a weak portfolio, or poor time management. It’s undercharging — and then burning out six months later wondering why the money still feels tight.
I’ve watched talented people charge €15/hour for work that the market pays €80/hour for, simply because they didn’t know any better, or because they were afraid to ask for more. This article is the guide I wish I’d had before I set my first rate.
Why Freelancers Undercharge (It’s Not What You Think)
Most freelancers don’t undercharge because they lack confidence. They undercharge because they’re pricing based on the wrong thing. They take their old salary, divide it by hours, and add a small buffer. That’s not freelance pricing — that’s employment pricing with extra steps.
As a freelancer, your rate needs to cover things your employer used to absorb invisibly: taxes (often 20–30% more than you expect), unpaid hours spent on admin and sales, sick days and holidays, software subscriptions, equipment, and the months between projects. Once you factor all of that in, the number you thought was “reasonable” usually needs to double.
The Right Way to Set Your Rate
Start from the bottom up. What do you actually need to earn — not want, need — to cover your life? Include rent, food, health insurance, taxes, and a small savings buffer. That’s your floor. Now calculate how many billable hours you can realistically sell each month. Hint: it’s not 160. Most freelancers bill 60–90 hours per month once you account for admin, business development, and the gaps between projects.
Divide your floor number by your realistic billable hours. Whatever you get — that’s your absolute minimum rate. You should not be quoting below this number for anyone, for any reason.
Now look at the market. What do other freelancers with your skill set charge in your target market? Not Upwork’s race-to-the-bottom end — the mid-to-upper range on platforms like Toptal, Contra, or direct client work. That’s your target rate. If your floor is €40/hour and the market mid-range is €70/hour, you have room to grow into.
How to Actually Raise Your Rates
Raising your rates feels scary the first time. Here’s what makes it easier: the clients who leave when you raise your rates were usually your worst clients anyway. They were price-sensitive, slow to pay, and demanding. The clients who stay — and the new ones you attract at your higher rate — tend to be better in every way.
For existing clients, give 30–60 days’ notice and frame it simply: “My rate is moving to €X from [date]. I wanted to let you know in advance so we can plan accordingly.” No apology, no over-explanation. Most good clients will accept it without much pushback. Some will try to negotiate. A few will leave. That’s okay.
For new clients, just quote the higher rate. You’ll be surprised how rarely it’s questioned when you present it with confidence. The way you say your rate matters as much as the number itself.
Project Rates vs. Hourly: Which to Use
Hourly rates protect you from scope creep on unclear projects. But project-based pricing lets you earn more when you’re efficient — and as you get better, your hourly equivalent goes up without having to justify it to anyone.
My rule: use hourly for ongoing retainers or anything open-ended. Use project pricing for defined deliverables with a clear scope. When quoting a project, estimate the hours, multiply by your hourly rate, then add 20% for the unexpected. The unexpected always happens.
The “Too Expensive” Objection
When a potential client says you’re too expensive, there are only a few possibilities: they genuinely don’t have the budget (not your client), they’re comparing you to cheaper alternatives (you need to show why you’re worth more), or they’re testing you (don’t flinch).
The worst response is to immediately drop your price. It signals that you didn’t mean the first number, which makes everything you say after that less credible. Instead, either hold firm and explain your value, offer a reduced scope at the same rate, or let them walk.
A client who respects your expertise will respect your rate. A client who doesn’t — won’t be pleasant to work with regardless of what you charge.
One Last Thing
Review your rates every six months. The market moves, your skills improve, and your costs go up. Freelancing is a business, and businesses that don’t adjust pricing go backwards in real terms.
The freelancers who build real financial stability — the ones who can actually afford to travel, save, and build something — are almost never the cheapest option. They’re the ones who figured out their number, said it out loud, and stuck to it.
