How to calculate your hourly rate as a freelancer, step by step
Work out how to calculate your hourly rate from the salary you want, your real monthly costs and a fair margin, with one worked example in riyals.
Azzam · · 5 min read
Contents
A client asks for your rate and you pause. You look at what others charge, pick a number that feels safe, and hope it covers the month. Most freelancers and small studios start this way, and most of them undercharge without knowing it.
This guide shows you how to calculate your hourly rate from three things you already know: the salary you want to pay yourself, what your business costs each month, and the margin you want to keep. One worked example runs through the whole page, so you can follow every number. If you want to skip the arithmetic, the free pricing calculator does it for you with your own numbers.
Start with the salary you want, not the market
Your rate has one job: to pay you a real salary and keep the business alive. So start with the salary you want each month, the amount you would accept from a good employer for the same work.
In our example the salary is 12,000 riyals a month.
Then count the hours you really work in a month. Not the hours you sit at the desk, the hours you work on paid jobs. A common starting point is 20 working days of 8 hours, which is 160 hours.
12,000 divided by 160 is 75 riyals. That is what one hour of your time costs you. It is not your price yet. It is the floor.
Add the costs that keep the business running
Every month you pay for things that no single client sees: rent or a studio desk, software, the payments and repairs on your camera, your phone, transport, marketing. Write them down for one normal month.
In the example they are:
- Rent and studio: 1,500
- Software and subscriptions: 350
- Gear payments, repairs and insurance: 800
- Everything else: 500
That is 3,150 riyals a month. Divide it by the salary: 3,150 divided by 12,000 is about 26.3%. This is your overhead. It means every hour you sell has to carry 26.3% on top of its cost, or the month ends short.
Your hour now costs 75 plus 26.3%, which is about 94.73 riyals.
Put your margin on top
A business that only covers its costs has nothing for slow months, new gear or growth. That is what the margin is for. Mizo OS starts creative studios at 35%, and that is the number in this example.
94.73 plus 35% is about 127.88. Rounded, your priced hour is 128 riyals.
So the hour you sell is made of three parts:
- Your time: 75
- Your share of the monthly costs: 20
- Profit: 33
When a client asks why an hour costs 128, you know exactly where every riyal goes.
Turn the hour into a day rate and a job price
Many creative jobs are sold by the day. An 8-hour day at this rate is about 1,023 riyals: 600 for your time, 158 for costs and 265 for profit.
Now a real job: a one-day shoot where you also bring a camera, a lens and lights. Charge a day rate for that gear, say 400 riyals. The gear passes through at cost, with no profit on top, because your margin belongs to your work. The shoot comes to about 1,423 riyals.
This is the same way Mizo OS builds every quote: time, then costs as a percentage, then profit on both, then gear and direct costs passed through.
What if you cannot bill 8 hours a day
Be honest here. Emails, edits nobody pays for, travel and admin all eat into the day. If you really bill 5 hours a day, the same 12,000 salary is spread over 100 hours, so one hour costs 120 riyals and the priced hour rises to about 205.
Notice what does not change: the day still costs about 1,023. Fewer billable hours do not make your day cheaper. They mean each hour you do bill has to carry more. If you quote by the hour, count the hours you can really bill. If you quote by the day, you are already safe.
Check the number against real life
A formula gives you a floor, not a law. Before you send the price, ask yourself three questions:
- Would I accept this job at this price and still feel good on the last day of the month?
- Does the price include the gear and travel this job needs?
- If the client asks for a discount, how much room is there before I work for free?
If the answer to the first question is no, raise the salary or the margin and run the numbers again. The pricing calculator updates as you type.
Questions people ask
How do I calculate my hourly rate as a freelancer?
Divide the salary you want each month by the hours you really bill in a month. Add your monthly business costs as a percentage of that salary, then add your profit margin on top. In the example above that gives 128 riyals an hour.
Should my rate include my gear?
Your monthly gear payments and repairs belong in your monthly costs, so every hour carries a share. When a job needs specific gear for the day, add a day rate for it on the quote, passed through with no profit.
What margin should I use?
Pick a margin that leaves room for slow months and new equipment. Mizo OS starts creative studios at 35%. Try a few numbers and look at the day rate each gives before you decide.
How much should I charge for a one-day shoot?
Start with your day rate, which is your priced hour times the hours in the day. Add the day rate of the gear the shoot needs, then any direct costs such as travel or permits. In the example, a shoot day with 400 riyals of gear comes to about 1,423 riyals.
Your next step
You now know how to calculate your hourly rate without guessing. Put in your own salary, costs and margin in the free calculator, and when the numbers look right, turn them into a quote in Mizo OS. The choice of price is yours. Now you can make it with the facts in front of you.