How to set your hourly rate

Setting your hourly rate is the most important pricing decision you'll make. Too low and you're broke. Too high and no one books you. The trick is to build it from the bottom up: start with what you need to earn, then work back to an hourly number that gets you there.

The math (simpler than you think)#

Here's the formula. We'll work through a realistic example:

Step 1: How much do you want to net (take home) per year?

Net income is what's left after taxes, Zvw contributions, and business costs. It's your personal salary. For this example, let's say you want to take home €35,000 per year (roughly €2,917/month). Pick your own number.

Step 2: Account for costs and taxes

You have to earn more than €35,000 gross to end up with €35,000 net. Here's why:

• Business costs: software subscriptions, insurance, co-working, equipment, etc. → assume €300/month = €3,600/year
• Taxes and contributions: income tax, municipal tax, Zvw contribution (a percentage of profit) → assume 30–40% of gross revenue

For rough math: if you want €35,000 net, and you lose 35% to tax + 10% to costs, you need to earn:

€35,000 ÷ (1 − 0.35 − 0.10) = €35,000 ÷ 0.55 = €63,636 gross revenue

Step 3: How many hours can you actually bill?

You can't bill 40 hours a week, every week, for 50 weeks a year. Here's the reality:

• Working weeks per year: 50 (accounting for 2 weeks vacation, 1–2 weeks admin/sick)
• Billable hours per week: 30–35 (not 40; the rest is admin, meetings, acquisition, overhead)
• Total billable hours per year: 50 weeks × 32 hours = 1,600 hours

(Experienced freelancers often charge only 25–30 billable hours/week and still earn well because their rate is higher.)

Step 4: Divide to get your hourly rate

Gross revenue needed ÷ billable hours = hourly rate

€63,636 ÷ 1,600 hours = €39.77/hour

Round up to €40/hour for simplicity, or €45/hour if you want a buffer.

A worked example: designer earning €50,000 net#

Let's do a more ambitious one. You want €50,000/year net.

Revenue calculation:

• Target net: €50,000
• Business costs: €5,000/year (studio, software, insurance)
• Taxes and Zvw: assume 35% of gross revenue
• Total gross revenue needed: €50,000 ÷ (1 − 0.35 − 0.08) = €50,000 ÷ 0.57 = €87,719

Billable hours:

• Weeks: 48 (add a week of holiday)
• Hours/week: 32 billable (realistic for project work)
• Total: 48 × 32 = 1,536 hours

Hourly rate: €87,719 ÷ 1,536 = €57.11/hour

Round to €60/hour or €65/hour.

At €60/hour × 32 hours/week × 48 weeks = €92,160 gross revenue, you'd net roughly €50,000–55,000 depending on your actual costs and tax bracket.

What if you can't fill 1,600 billable hours?#

Some months you'll have few bookings. Plan for that:

Option 1: Raise your rate If you can only reliably book 1,000 hours/year, your rate needs to be higher to hit your revenue target.

€63,636 ÷ 1,000 hours = €63.64/hour (instead of €40)

Option 2: Lower your income target If €40/hour is all you can charge in your market, you need to accept a lower net income, or add additional services (training, retainers, productised services).

Option 3: Mix billing models Don't just bill hourly. Offer:

• Projects (estimated hours × rate)
• Retainers (monthly fee for X hours/month, booked or not)
• Value-based (a fixed price based on the outcome, not hours)

Retainers especially fill the gaps. A retainer at €3,000/month (25–30 hours) covers your baseline and lets you take on project work on top.

The three mistakes freelancers make#

Undercharging to be competitive. You're not competing on price—you're finding the right clients. A client who wants the cheapest option will always be difficult. Charge your real rate and attract clients who value you.

Not accounting for admin time. You'll spend 10–15 hours/month on email, invoicing, admin, pitching. That's not billable but it's real. Your rate must cover it.

Forgetting holidays and sick time. If you take two weeks off and earn €0, your annual billable hours drop. Either charge more or save hard.

Tactics to actually earn that rate#

1. Raise your rate every year Aim for 5–10% yearly. You'll lose a client or two. You'll also gain better clients.

2. Focus on clients who value you A client who haggled you to €40/hour will always expect it. New clients come at your new rate. You're training the market.

3. Offer packages or retainers Hourly rates are unpredictable (some weeks you're booked, some you're not). A retainer or project-based fee smooths income and is often higher per hour.

4. Build a reputation Your first year, you might charge €30/hour and barely fill your hours. By year three, at €50/hour, you'll be booked solid with half the effort. That's because reputation compounds.

5. Diversify Don't live and die by billable hours. Sell digital products, offer group training, write a course. These turn time into leverage and often pay more per hour of your effort.

Revisit quarterly#

Your rate isn't set in stone. Review it every three months:

• Are you booked 80%+ of your target hours? Raise it.
• Are you struggling to fill half your time? Lower it or pivot your target market.
• Did your costs jump? Your rate needs to cover it.

After your first year, you'll have real data. Use it.

Frequently asked questions#

Your rate is the single most powerful lever in your freelance business. Too low and you're trapped. Too high and you're invisible. The trick is to start honest, watch your booking rate, and adjust upward as you get better and busier. Use ZZP Belasting to track your billable hours and monitor whether your rate is hitting your income target month to month.

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