The short answer
Price freelance work from three angles, then sell a package rather than hours. The cost floor is the hours a job takes times the hourly rate you need. The market range is what comparable providers charge. The value is what the result is worth to the client. Set a fixed price between the floor and the value, define what it includes (pages, revision rounds), and price extras in advance. Then test the price against your effective hourly rate: revenue divided by every hour worked, billed or not.
The effective hourly rate
The rate you quote is not the rate you earn. Revisions, client calls, proposals, invoicing and chasing late payments all take hours that no client pays for. The effective hourly rate is revenue divided by every hour worked on the business, billed or not.
It is the only rate that tells you whether the work pays. An hourly quote also has a second problem: it charges the client for every revision and pays you nothing for the ones you do not bill, so the more a client asks for, the less you earn per hour.
Three ways to set a price
| Method | How it works | What it tells you |
|---|---|---|
| Cost-plus | Hours per job × the hourly rate you need, plus costs | The floor: below it, the job loses money |
| Market rate | What comparable providers charge for the same scope | The range buyers will compare you against |
| Value-based | What the result is worth to the client | The ceiling, and the argument for your price |
A good price sits between the floor and the value, inside or near the market range. The value argument is what lets you explain the price in the client’s terms instead of yours.
How to price a job in six steps
1. Count last year’s real hours
Include revisions, calls and admin. Divide revenue by the total to find your effective hourly rate today.
2. Set the floor
Estimate the hours a standard job takes, including a realistic number of revisions, and multiply by the hourly rate you need.
3. Read the market
Find what three to five comparable providers charge for the same scope, and note what their price includes.
4. Find the value to the client
Ask what one result is worth to them: a new customer, a booked patient, an hour saved. Use their figure, not yours.
5. Define the package
Fix the deliverables and the number of revision rounds, and price extra pages or rounds in advance, so a change is a price, not a negotiation.
6. Test the effective rate
Divide the package price by every hour it will take. If the rate is too low, change the price or the scope before you quote.
Worked example: Grace
The scenario
A $45 quote that paid $30 an hour
Grace Lin is a 36-year-old marketing manager in Chicago who writes website copy for small businesses in the evenings and at weekends. In 2025 she quoted $45 an hour and billed 410 hours across nine clients: $18,450. She also worked 200 hours of revisions she never billed, one client paid a $3,600 invoice 94 days late, and in April 2026 she owed $6,134 of tax with nothing set aside.
$18,450 over 410 billed hours is $45 an hour. Over the 610 hours she actually worked, it is $30.
Three of her nine clients were independent physical therapy and chiropractic clinics: 54% of her revenue, and the fewest revisions. She chose clinics as her one client type and priced for them from all three angles:
| Angle | Figure | How it was found |
|---|---|---|
| Cost-plus floor | $1,800 | 24 hours for a five-page site at $75 an hour |
| Market rate | $1,500 to $3,000 | Comparable writers’ prices for a five-page site |
| Value to the client | About $1,500 a patient | The clinic’s own figure for revenue from one new patient |
| The package | $2,400 | Five pages and two revision rounds; extra page $400, extra round $300 |
$2,400 sits in the middle of the market range and $600 above the floor, and the clinic can compare it with two new patients. Extras are priced in advance, so a request for a sixth page is a $400 change order rather than an argument.
Break-even and the plan
The contribution margin is the price minus the costs that vary with each sale. The break-even point is the number of sales at which contribution covers the fixed costs of the business.
For Grace, each package leaves $2,340 after $60 of variable costs, so one package covers her $1,140 of fixed costs for the year. Eight packages match all of 2025’s revenue in 192 hours, against the 610 hours it took before. Her 2026 plan is twelve packages: $28,800 of revenue over 348 hours in total, or about $83 an hour, and $26,940 of profit before tax.
The plan was tested both ways. A 20% lower price still leaves $21,180 of profit. If each package takes 20% more hours, the effective rate falls to $71. Across all ten prompts, her effective rate went from $30 to $87 an hour.
Try it: a shortened Prompt 03
This is a shortened version of Prompt 03 from the Side Business & Freelancing pack, set up to run on its own. Paste it into ChatGPT, Claude or Gemini and fill in the brackets.
You are a former agency owner who has priced creative and consulting work for small businesses. An hourly rate charges clients for revisions and pays the freelancer for none of the unbilled ones, so you price a defined package from three angles, never from a single hourly figure. YOUR WORK: - What you deliver, for which type of client: [service, client type] - Last year's revenue and every hour worked, billed and unbilled: [figures] - Hours a standard job takes, including revisions: [hours] - The hourly rate you need: [amount] THE MARKET: - What comparable providers charge, and what it includes: [3-5 examples] - What one result is worth to your client: [e.g. revenue from one new customer, in their own figure] Produce: 1. YOUR EFFECTIVE HOURLY RATE TODAY. Revenue divided by every hour worked. 2. THE THREE ANGLES. The cost-plus floor, the market range and the value to the client, each with its arithmetic. 3. THE PACKAGE. A fixed price between the floor and the value: what it includes, the number of revision rounds, and the price of each extra. 4. THE ARGUMENT. Two sentences explaining the price in the client's terms. Use only my figures and the market examples I give. Mark any estimate as an estimate.
The full Prompt 03 has eight parts rather than four, and it reads the Business Brief built by prompts 01 and 02. Prompt 04 then models the break-even point and tests every price against the effective hourly rate, as a working Excel model in Claude.
Checks before you quote
- The price is above your cost floor, with revisions counted.
- The package states the deliverables and the number of revision rounds.
- Extras are priced in advance.
- The effective hourly rate at this price is one you would accept.
- You can explain the price in terms of what the result is worth to the client.
Questions
How do I calculate my freelance hourly rate?
Start from the rate you need, then check what you actually earn: divide last year’s revenue by every hour worked, including revisions and admin. That effective rate is usually well below the quoted one.
Should freelancers charge hourly or per project?
Per project, as a defined package, for most repeatable work. A package pays you the same however quickly you work, limits revisions, and lets the client compare the price with the value of the result.
What is value-based pricing?
Setting the price from what the result is worth to the client, such as the revenue from new customers, rather than from your hours. It sets the ceiling for the price and gives you the argument for it.
How much should I set aside for tax as a freelancer?
It depends on your country, income and other earnings. Work out your rate with a tax professional or your tax authority’s guidance, and move that share of every payment into a separate account when it arrives.
Written by a former Gartner Managing Partner and investment banking SVP
The guides and the prompt templates on this site come from a career spent building these documents: board decks, forecasts, business cases and hiring decisions, as Managing Partner at Gartner, SVP in investment banking and Country Manager at international subsidiaries. The worked examples are published in full on each product page. Browse the Prompt Library.
Grace Lin and her clients are fictional, and the figures are illustrative.
Tax rules differ by country and state; nothing here is tax advice. Output from any AI tool should be reviewed before use.