I was charging £35/hour and barely covering rent. A boring Google Sheets exercise changed how I think about pricing forever.
In my first year freelancing I charged £35 an hour. I picked that number because it felt like a lot more than my old salary divided by working hours, and I didn't want to seem greedy. Classic mistake.
By month eight I was working 50-hour weeks and still couldn't afford to take a week off. Something was obviously wrong, but I couldn't figure out what. I was billing more hours than I ever worked in employment. How was I earning less?
A mate who'd been freelancing for years told me to sit down and do the actual maths. Not vibes-based pricing. Real numbers. So I opened a spreadsheet and worked backwards from what I needed.
Annual costs: rent and bills (£14,400). Food and living (£6,000). Pension contributions, because nobody else is paying into one for you (£3,600). Software and tools (£1,800). Insurance (£600). Training and development (£1,000). Emergency fund contribution (£2,400). Tax set-aside at roughly 28% including NI. Total: about £42,000 before I'd saved a penny or had a holiday.
Then I counted my actual billable hours. Out of roughly 260 working days a year, subtract 25 for holidays, 5 for sick days, and about 50 for admin, marketing, invoicing, and the other stuff you don't bill for. That left me with 180 billable days, or about 1,260 hours if I worked 7 billable hours a day (and that's generous).
£42,000 ÷ 1,260 hours = £33.33 per hour. My £35 rate was barely above the minimum I needed to survive. No wonder I was stressed.
I didn't just bump my hourly rate. I stopped charging by the hour entirely for most work.
Instead, I started quoting fixed prices per project. A website redesign wasn't "80 hours at £X." It was "£4,500 for a five-page site with two rounds of revisions." The client knows exactly what they're paying. I know exactly what I'm earning. And if I get faster (which you do, every single project), I earn more per hour without having to justify it.
For retainer clients I switched to monthly packages. £1,200 a month gets you X hours of support, Y deliverables, and a weekly check-in call. Predictable income for me, predictable costs for them. Everyone's happier.
My effective hourly rate went from £35 to something closer to £65 within six months. Not because I got twice as good at the work. I just stopped penalising myself for being efficient.
I lost a few clients when I raised my prices. Two of them, specifically. And honestly? They were the two I least enjoyed working with. The clients who value your work will pay a fair price for it. The ones who won't were never going to be good long-term relationships anyway.
If you haven't done the spreadsheet exercise, do it this week. It takes 30 minutes and it might be the most important half hour you spend on your business all year.
