Setting your day rate as a freelance designer

Start from what you need to earn in a year, divide by the days you can really bill, then check the result against the market.

Setting a day rate is one of the hardest parts of going freelance. Too low and you work too much for too little; too high and the first clients never call. The good news: there is a simple way to find a starting point that is based on your real costs, not on a number someone mentioned at a party.

Step 1: what do you need in a year?

Start with the salary you would want as an employee for the same work. Then add what an employer would normally pay on top: health and pension contributions, paid holidays, sick days, equipment, software, training. As a freelancer, you pay all of this yourself. Add your business costs too: insurance, accountant, co-working desk, travel. Many freelancers find that they need roughly 1.5 to 2 times their target salary in revenue to end up in the same place.

Step 2: how many days can you really bill?

A year has about 260 working days. Take away holidays and public holidays, a realistic number of sick days, and the time you spend on things nobody pays for: finding clients, writing proposals, invoicing, updating your portfolio, learning. For many designers that leaves somewhere between 100 and 160 billable days, especially in the first years.

Step 3: divide

Your yearly revenue target divided by your billable days gives you your minimum day rate. An example: if you need 90,000 in revenue and can bill 130 days, your minimum rate is about 690 a day. Round it to a clear number, and treat it as your floor, not your target.

Step 4: check it against the market

Now compare. Ask freelancers you know what they charge, look at the salaries published for employed roles at your level (our monthly Pay check is a start), and think about who your clients are. A large company with a marketing budget will pay a different rate than a small cultural institution, and that is fine, as long as you know which projects you are taking for the money and which for the portfolio.

Quoting projects

• Estimate in days, then add a buffer of 15 to 20 percent for feedback rounds and things you did not see coming.
• Write down what is included: number of concepts, rounds of changes, file formats, usage rights.
• Ask for part of the fee up front on new clients, for example a third at the start.
• Put your payment terms on every invoice, and send invoices on time.

Raising your rate

Review your rate once a year. The easiest moment to raise it is with new clients; for existing ones, give a few weeks' notice and a short explanation. If you are fully booked for months, that is usually a sign that your rate is too low.

The figures in the example are for illustration. Taxes, social insurance and the rules for freelancers differ a lot between countries, so check the details with an accountant where you live.