How to calculate your freelance day rate

One of the most common questions from new freelancers — and a recurring anxiety for experienced ones — is whether they're charging the right amount. Here's a practical formula and the thinking behind it.

The basic formula

Start with what you need to earn, then work backwards:

1. Desired annual income — what do you want to take home after tax?
2. Add your business costs — software, equipment, insurance, accountant, training
3. Add tax and NI — roughly 20–30% of gross income depending on your situation
4. Divide by billable days — not working days. Realistically, 60–70% of your time is billable; the rest goes on admin, pitching, CPD and gaps between projects

Check against the market

Your formula gives you a floor — the minimum you need to charge to sustain your freelance career. Now check whether the market will bear it.

Research tools:

• Glassdoor / LinkedIn Salary: Find equivalent permanent salary, then apply the day rate formula
• ITJobsWatch: UK tech contractor rates by skill and location
• YunoJuno, Toptal, Worksome: Platforms with visible rate ranges
• Your network: Ask peers what they charge — most freelancers are surprisingly open about rates

The permanent salary to day rate rule of thumb

A rough but useful conversion: divide the annual permanent salary equivalent by 220 (working days), then multiply by 1.5–2x to account for the costs, risk and gaps of freelancing.

So a role that pays £50,000 permanently → £227/day permanent equivalent → £340–455/day as a freelancer. This is a starting point, not a ceiling.

When to raise your rate

• When you have more work than you can take on — demand exceeds supply
• When you've acquired a new skill or qualification that the market values
• When you haven't raised it in more than 12 months
• When a new client enquires — always quote slightly higher than your current rate

How to raise your rate with existing clients

Give notice — typically 30 days — and state it simply: "From [date], my day rate will be £[X]. I wanted to give you plenty of notice." No lengthy justification needed. Most long-term clients expect it; if they push back, you can discuss.