Setting your freelance day rate as a technical profile

The classic beginner's mistake with freelance rates: dividing your old gross salary by twenty working days and adding a bit on top. That rate looks high but proves too low after a year, because it forgets everything that has to come out of it. The right method calculates backwards.

Step 1: start from what you want to keep

Start from the net monthly income you need, and add your new costs: social contributions (count roughly a fifth of your income), insurances, accountant, pension build-up, equipment and transport. Don't forget the replacement cost of what your employer used to pay: the car, the group insurance, the hospitalisation cover, the paid leave. That gives you what your business must generate per year, and that amount is almost always higher than new freelancers expect.

Step 2: divide by realistic days

A year does not hold 260 billable days. Subtract holidays, public holidays, illness, training, administration and idle time between assignments, and you land closer to 180 to 210. Divide your yearly amount by that and you have your floor rate: the amount below which freelancing makes you poorer than employment. Write that number down and remember it; in every negotiation this is the line you don't go under.

Step 3: position above your floor

The market decides the rest. Scarce specialisations, commissioning experience and willingness to travel push rates up; long, comfortable assignments close to home justify some margin below. Ask around in your field, look at what assignments ask rather than what colleagues claim to earn, and retest your rate at every new assignment, because the market moves.

The classic rate traps

Three mistakes come back every time. Sticking to your starting rate too long: if you are demonstrably worth more after a year, you may ask for it, certainly at a new assignment. Accepting everything to avoid a gap: one long-running assignment that is too cheap pushes your yearly average down harder than two weeks idle. And giving discounts without anything in return: a lower rate is fine, but then for a longer term, guaranteed days or a shorter payment term.

One thing never changes: clients don't pay a rate because your costs are high, but because you solve a problem that costs them more than your invoice. So defend your rate with what you deliver. Unsure what the market pays for your profile today? Just ask us; we see the rates from both sides.