The Flaw in Traditional Pricing
Most new freelancers make a critical mistake: they take their desired annual salary and divide it by 2,080. For example, if you want to make $60,000, you might think $28/hour is enough. It is not. That formula assumes you are billable 40 hours a week and have zero expenses.
The 3 Critical Factors
1. The Tax Buffer
As a freelancer, you get the full check, but the government wants its share later. A safe rule of thumb is to set aside 25-30% of every check immediately for self-employment taxes.
2. Unpaid Overhead
Your rate must cover health insurance, professional software, marketing fees, and office rent.
3. The "Billable Efficiency" Trap
You cannot bill 8 hours a day. Data shows that successful freelancers only bill about 4 to 5 hours a day. Your rate must be high enough that working 5 hours covers your whole day's salary.